IFS has announced its third quarter results for the quarter ending 30th September 2024. The enterprise cloud software vendor has continued its already impressive growth with another set of strong figures. As the firm is still privately owned, it has only revealed its growth percentages rather than the actual numbers.
- ARR increased 30% year over year, though this is slightly down from the rise in Q3 2023 (30%)
- Cloud revenue grew by 46%, down from 54% in Q3 2023
- Software revenues grew by 20%, down from the 37% it recorded in Q3 2023
Cloud revenue growth was boosted by a 71% increase in customers migrating to the IFS Cloud. However, as that number rises, the number of customers still to migrate falls. The results do not mention the strength of the pipeline. Nor has IFS delivered any outlook for the full year or 2025.
The results, IFS claims demonstrate it is the fastest-growing industrial software company and global leader in Industrial AI. It’s a claim that it may struggle to maintain over time as it relies on growth percentages that its legacy customers boost.
Broad growth
The growth, however, is not just from legacy on-premises customers. IFS revealed that it had added 90 new customers in Q3 2024. These customers apparently included Ahrend, Avia Prime, Comcast, DCC Plc, Drayton Aerospace, General Dynamics Ordnance and Tactical Systems-Canada, HomeServe, ista SE, Quanta Services Australia, Rolls Royce Power Systems, Sureserve, Stertil Group, TDC NET, SNCF Gares & Connexions.
Some of the above certainly are new customers but one, at least, Homeserve was in 2019. These may be new IFS Cloud customers, but they are not all net new logos.
IFS also claimed that it is seeing growth in all regions without revealing which sectors or countries it has seen the strongest growth in. However, all solutions within its portfolio have seen growth, including IFS Cloud, Poka, and recent acquisitions EmpowerMX and Copperleaf.
IFS CEO Mark Moffat said, “Our Q3 results reflect IFS’s commitment to solving critical industry challenges through Industrial AI. IFS.ai is driving the next industrial revolution, and our continued growth is a testament to the value we’re delivering to customers and partners alike.
“IFS’s clear vision is to become the undisputed category leader in industrial software. This latest financial performance shows we are on the right track to make this vision a reality.”
IFS Chief Financial Officer Matthias Heiden added, “The 30% growth in ARR demonstrates our success in driving predictable, profitable growth. We continue to lead with customer-focused solutions, strongly supported by our innovative global partner network.”
Can Copperleaf acquisition propel organic growth?
During Q3, IFS completed its acquisition of Copperleaf, a global leader in strategic asset management and asset investment planning (AIP). IFS should be able to help resell Copperleaf across its asset-intensive customer base. Thus, further boosting revenues in the next few quarters. This may work in both directions, with existing Copperleaf customers more likely to consider IFS Cloud if they are looking to replace their ERP or EAM solutions.
IFS also acquired EmpowerMX, an AI-powered aviation maintenance software provider specialising in Airframe Maintenance Repair and Overhaul (MRO) solutions. This strengthens IFS’s MRO solutions, which it acquired from Mix and its Maintenix MRO solution in 2016.
Both acquisitions were completed during the quarter and should have a bigger impact on revenue in future quarters as well.
What else happened in Q3
IFS also held its global user conference, Unleashed. At the conference, it revealed the second of its two annual updates. IFS Cloud 24R2 added 60 new Industrial AI capabilities for all six of its target industries. It also unveiled IFS BOLO 15, a next-generation oil and gas accounting solution. There was also a new sustainability management module in partnership with PwCand, a partnership with the tax compliance vendor, SOVOS.
It made two senior appointments in the quarter, with Debra McCowan appointed Chief Human Resources Officer (CHRO) and Helena Nimmo appointed CIO.
Analyst firms also recognised IFS in the quarter included:
- IFS was named a Customers’ Choice in the 2024 Gartner Peer Insights Voice of the Customer for Cloud ERP for Product-Centric Enterprises
- IFS Ultimo named a Leader in the Verdantix Green Quadrant: Enterprise Asset Management Software 2024
- IFS assyst recognized as a Leader and Fast Mover in the GigaOm Radar for IT Service Management
- IFS was named the fastest-growing vendor among the top 10 companies in IDC Worldwide Asset Life-Cycle Management Applications Market Shares 2023 report
Enterprise Times: What does this mean
As the percentage of cloud revenues grows and the number of on-premises customers reduces, IFS will need to find revenue streams to replace them. In the next few quarters, Copperleaf and EmpowerMX should help boost revenues further. However, it will be interesting to see whether it can continue to maintain the revenue growth as it starts to come head to head with the resurgent SAP in competitive tenders.
What is, and will remain, key to IFS is its laser focus on asset-intensive industries and continued investment in a product portfolio. IFS is growing and strengthening its portfolio through a combination of acquisitions, product development, and partnerships. This strategy seems to be bearing fruit and achieving positive outcomes.
