SDL PLC Trading Statement (4369Z)
December 15 2017 - 2:00AM
UK Regulatory
TIDMSDL
RNS Number : 4369Z
SDL PLC
15 December 2017
SDL plc
Trading Update
15 December 2017, Maidenhead, U.K. - SDL plc ("SDL" or "the
Group"), a leader in global content management and language
translation software and services, is providing an update on the
trading performance for year ending 31 December 2017.
SDL's sales pipeline for the period is in line with
expectations. However, the Group is reliant on the closure of
certain software deals, which may not be processed and fully
awarded by 31 December 2017. If these deals are not closed,
Adjusted EBITA(1) for 2017 on a like-for-like(2) basis will be
below current market expectations. The Group has also experienced a
faster than forecast shift from perpetual licence sales to
Software-as-a-Service (SaaS) sales. This has resulted in higher
costs recognised in the year, with revenues deferred into future
years.
In Language Services, SDL is pleased to report continued revenue
growth and a recovery in gross margins, as expected. The Group has
fully addressed the margin pressure and the two challenging
contracts in Asia reported in the first half results. Our Language
Services automation programme, 'Helix', is on track and set to
deliver further gross margin gains during 2018.
Our Language Technologies division has delivered good licence
wins. In October, the Group also announced a number of upcoming
product launches in the segments of content management ('Tridion
DX') and AI-assisted content creation, to positive market
response.
Improved processes and greater automation, introduced as part of
SDL's transformation, will enable the Group to rationalise parts of
its global operating and organisational model during 2018. As a
result, SDL has taken action to reduce parts of its cost base. The
Group expects to recognise an exceptional charge in 2017 of
approximately GBP3.5 million and a slightly lower charge in 2018,
as we look to complete the optimisation of our operating model.
However, to capitalise on the growth opportunities in the
market, the Group plans to increase investment overall, with a
focus on developing our premium solutions in fast-growing
verticals, such as Life Sciences and Marketing Solutions, and to
accelerate the development of our cloud-based, AI-powered Content
Globalisation platform. Some of the core features of this platform,
such as Machine Learning, will be, we believe, disruptive and
industry leading.
The nature of our technology investments, coupled with
improvements to the Group's systems and processes now require us to
capitalise a small portion of our annual development spend, which
has risen in the year. In 2017, the Group expects R&D
capitalisation to be GBP2 million to GBP3 million, amortised over
3-4 years. For clarity, the positive benefit of this capitalisation
is excluded from our commentary on the like-for-like Adjusted EBITA
above.
The outlook for our industry remains very positive and, with the
right level of investment, the Group believes it can move to the
forefront of its industry. SDL remains committed to delivering
double digit revenue growth and mid to high teens profit margins
over the medium to long term.
(1) Adjusted EBITA = Earnings Before Interest, Tax and
Amortisation of Acquired Intangibles and Exceptional Items
(2) Like-for-like basis = capitalised R&D in the period
treated as an expense
For further information please contact:
SDL plc 01628 410100
Adolfo Hernandez, CEO
Xenia Walters, Interim
CFO
FTI Consulting LLP 0203 727 1000
Dwight Burden / Emma
Hall
About SDL
SDL (LSE:SDL) is the global innovator in language translation
technology, services and content management. Over the past 25 years
we've helped companies deliver transformative business results by
enabling powerful, nuanced digital experiences with customers
around the world. Are you in the know? Find out why 78 out of the
top 100 global brands work with us at SDL.com and follow us on
Twitter, LinkedIn and Facebook.
This information is provided by RNS
The company news service from the London Stock Exchange
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