IFS reported its sixth consecutive year of double-digit growth. In its results for the full year up to December 31st. It revealed net revenues of €1,062 million, up 30% compared to 2022 and breaking the billion Euro milestone for the first time. Perhaps more impressive is that growth appears to have accelerated. The company only achieved 19% net revenue growth in the previous year.
The IFS 2023 results
Software revenue rose by 33% to €853 million, and recurring revenue rose 35% to €810 million. For FY2022, the stand-out statistic was cloud revenue growth, which hit 80%. In 2023, that growth slipped back to a still impressive but more sustainable 46%. That growth was down to new customers and existing customers migrating their solutions to IFS Cloud.
IFS has had great success in migrating its existing user base. Many of whom have traditionally skipped a major update and are now naturally migrating to the cloud. What it hasn’t done is flagged what percentage of its existing customers have yet to move, but this number will be dwindling.
IFS has not broken down the revenue by product or region. However, it noted that it achieved strong results across all its regions. It continues to focus on a core set of industries with leading solutions, according to analysts in FSM, EAM, ERP and ESM.
IFS Chief Financial Officer, Matthias Heiden, commented, “2023 has delivered results that we are very proud of. ARR is clearly an important long-term performance metric, and our 26 percent growth in ARR YoY was driven by new logo acquisitions, significant expansion within the Install Base and low churn. All of which points to a very healthy mix of revenue and consistent execution across the entire business.
“We saw very healthy double-digit growth in all our regions, with a notable outstanding performance in our North American and APJ, ME&A region. This combined with the performance of our ecosystem is clear evidence that our focus on product and the industries we serve are delivering the value our customers need globally.”
Looking back and forward
With Darren Roos stepping down for the newly appointed CEO IFS CEO Mark Moffat, it will be interesting to see whether the leadership can continue the momentum. There have been several changes in the leadership with Max Roberts appointed as its new Chief Operating Officer and Belinda Finch as Chief Information Officer. In the UKI region, Stephanie Poore was appointed Managing Director for the UK and Ireland. In addition, André Robberts joined as the new regional President for Southern and Western Europe and LATAM.
Moffat commented, “This time last year we reported five years of strong consecutive double-digit growth. I am hugely proud that the IFS team has continued this trend and also delivered an outstanding 2023. We will shortly reach a very significant landmark for IFS with $1bn ARR representing a strong vote of trust from our customers.
“Our core IFS value of being customer obsessed is paying off and with IFS.ai we are creating further productivity and automation opportunities for them while adding a critically important dimension to our proposition. We have delivered AI capabilities to our customers for a number of years now, and with IFS.ai we are driving AI across all our products effectively democratizing AI for all of our customers’ users.
“2024 will be a continuation of our strategy to deliver industry-specific and market-leading capabilities in FSM, EAM, ERP & ESM, which includes investing in M&A. For our customers, I am proud to say that IFS moves as one, creating value faster and delivering our best to our customers when it matters most, at the Moment of Service.”
A year of growth on all fronts
During 2023 IFS added 243 net new logos. New customers included Mattr, NOTE AB, Havfram, Tele2 AB, Van Oord, TÜV NORD, Stannah Lifts, Enercare, My Dentist, and the City of Tallahassee. Importantly, revenue from partners grew by 10%, and they now contribute 41% to revenue. The partner ecosystem is a key area that will help IFS scale.
As it seeks to compete directly with SAP, the relationships with SIs will be critical, and it also expanded relationships with several. They included Accenture for Utilities & Resources, Telco, Capgemini for Construction & Engineering, Manufacturing, Energy, Utilities & Resources, and PwC for Energy, Utilities & Resources, Construction & Engineering. It also teamed up with Tech Mahindra in India.
Its joint venture with Bearing Point, Arcwide also extended its capabilities into Manufacturing, Services, Construction, & Engineering. Key to that expansion was the acquisition of an IFS partner in DACH, bytics AG.
While the acquisitions brought further strength to IFS Cloud, it also continued to invest in product. It rolled out two major updates in the year, improving IFS.AI, its AI platform, as well.
Its products were recognised by several analysts. IDC placed it as a leader for Field Service Management solutions and Service LifeCycle Management Platform for 2023-24. Other recognition came from Gartner and Nucleus. The company also won several industry awards for technology, leadership and culture.
Enterprise Times: What does this mean
While Moffat commented on these results, the groundwork for them was laid by Roos. He galvanised the company over the last few years. 2024 is Moffat’s first year in charge. He will aim to uphold or improve on the growth trajectory that Roos maintained. It will not be an easy task. However, the leadership transition has appeared smooth, with promotions rather than appointments key to this.
There is a lot of detail missing from this announcement. That includes how the products and regions are actually performing and whether deal size is increasing. IFS has been targeting SAP clients. However, that is getting tougher with the recent successes of S/4HANA.