IFS has published a business update for the first quarter of 2023. The global vendor continues to grow with net revenue of €176 million, up 38% from Q1 2022. Cloud revenues grew 55% year over year in the first quarter, though this is down slightly from the 67% it achieved in Q1 2022. Overall recurring revenues achieved €176 million, a rise of 48% year over year, a slight increase over the 45% it achieved in Q1 2022. Software revenue was €186 million, a rise of 44% year over year, compared to the 25% year over year growth it achieved a year ago. ARR rose 57% year over year.
IFS CEO Darren Roos commented, “I am very proud that we are taking our performance trend from 2022 into 2023. As well as the strength of our technology and the trust our customers place in us, our strong Q1 performance is underpinned by contribution from our FY22 acquisitions which are all performing to plan. Over the past 5 years we’ve worked hard to improve the agility, quality and resilience of our business model and these investments are paying off as we continue to create shareholder value despite the macroeconomic uncertainty.”
Growth across the board
According to the press release, the results were strong across all industry sectors and regions. That also includes the US, when, in a recent interview with Roos, he revealed that software revenue growth in 2022 hit 80% and over 50% of the IFS revenues now come from the US.
IFS continues to deliver solutions to asset-centric industries. Its solutions include ERP, Field service management (FSM), Enterprise Asset Management (ESM), as well as Planning and Scheduling Optimization (PSO). The firm is particularly strong in the EAM segment. Gartner recognises it as the market leader in terms of Global Market share for the sector in 2022. It was also recognised as a leader for ERP and FSM by analysts.
It continued to add new customers and increased demand from existing customers such as RES, Enercare, KAN, HEXPOL, Lujatalo Oy, MyDentist, and NCC. With digital transformation still top of mind for CIOs in an environment where budgets are scrutinised, IFS continues to win business. Its focus on delivering Moments of Service appeals to many as they look to retain customers in a tough environment. Customer service is a differentiator for many.
IFS continues to focus on its core market, with a clear understanding of what it is trying to achieve against its new and historical rivals. Roos has been at the helm for six years and has grown the portfolio through acquisitions consistently year over year. The last acquisition was Ultimo Software Solution, which provides a complementary Asset management solution for the mid-market.
Ultimo is performing well, as Roos recently stated, “Yeah, beyond our expectations. When we acquire a business, we put a business plan together. We typically come up with two versions—the version that underpins the acquisition – the base case. Then we come up with a business case, which is what we hope to achieve. And through 2022, exceeded that business case. So I’m super happy with the team.”
IFS continues to focus on growth and bringing solutions to asset-centric businesses. As IFS Chief Financial Officer, Matthias Heiden, concluded, “These strong results highlight the relevance of IFS in its markets and that we are pursuing the right growth strategy – one which is all about focus.”
Enterprise Times: What does this mean?
This is a business update rather than results. IFS is still not revealing details about profitability and any breakdown into its regions and industries. Its investors now include EQT, TA and HG. It has the financial muscle behind it to make several more acquisitions. It is now approaching a year since it has done so.
However, don’t expect an acquisition that diverges from its core focus. As Darren Roos indicated, “There are some areas that we can extend the capability that we already have? I think we are today the most rounded across the areas that I’ve just discussed. But, we’d like to add a bunch of pieces, which would make it even easier for customers.” He also expects an acquisition in 2023. Watch this space.
Overall, IFS continues to impress. The growth rates are high, and the company is powering towards €1 billion in annual revenues as well, another landmark. That growth does not include the meteoric growth seen by Workwave. Workwave is the other company in the IFS group that also issued results this week. Combined, the group will have annual revenues of approach $1.5 billion, which should increase the $10 billion valuation the group received after the investment by HG
