SDL plc: Preliminary Results for the Year Ended 31 December 2017

A Year of Root and Branch Transformation

MAIDENHEAD, England--()--SDL plc (“SDL”, “the Group” or the “Company”), a leader in global content management and language translation software and services, announces its preliminary results for the twelve months ended 31 December 2017.

Financial Summary

  2017   2016
Group Revenue £287.7m £289.9m
Revenue from Continuing Operations £285.7m £264.7m
Profit/(loss) before tax £29.9m (£15.8)m

Adjusted profit before tax from Continuing Operations1

£22.0m £27.0m
Adjusted basic earnings per share from Continuing Operations 18.9p 26.6p

Adjusted diluted earnings per share from Continuing Operations2

18.8p 26.3p
Net Cash £22.7m £21.3m
Dividend per share 6.2p 6.2p

Financial highlights

  • Revenue from Continuing Operations up 7.9% to £285.7m (2016: £264.7m), +3.2% at constant currency3
  • Language Services revenue up 11.6% to £184.5m, +7.1% at constant currency
  • Language Technologies revenue up 7.0% to £48.6m,+1.6% at constant currency
  • Global Content Technologies revenue contracted 2.6% to £52.6m (down 7.4% at constant currency), with strong prior period perpetual licence deal
  • Adjusted profit before tax of £22.0m (2016: £27.0m) excludes £2.5m of research and development expenditure which has been capitalised in the year (2016: £nil)
  • The disposal of the Fredhopper and Social Intelligence business realised a profit on disposal of £20.6m and net cash proceeds of £22.2m

Strategic transformation

  • Helix automation programme is on track
  • Strong traction in premium verticals, particularly Life Sciences and Marketing Solutions
  • Increased number of Connectors to over 100, enabling more customers to have automated and integrated access to content and services
  • Undertook restructuring activity in the second half of the year to reduce headcount and costs in specific areas of the business and to structure the business with clearer lines of accountability
  • Key product launches, including Neural Machine Translation and SDL Trados Studio, with the latter being the most successful release to date
  • Machine Translation (“MT”) available in Amazon Marketplace

Operational highlights and KPIs

  • Good progress across our operational KPIs
  • 259 cross-sell and up-sell deals (2016: 228)
  • Premium Services revenue up by 78% to £40.1m (2016: £22.5m)
  • Language Services RRR (Repeat Revenue Rate4) of 93% (2016: 93%)
  • Technology ARR (Annual Recurring Revenue5) up 4.8% to £63.4m at 31 December 2017 (2016: £60.5m);

Commenting on the results, Adolfo Hernandez, CEO said:

“2017 was a period of operational heavy-lifting and it is frustrating that, as we drove our transformation, we were not able to perform consistently in financial terms in all areas of the business. Our financial results were impacted by weak gross margins in Language Services in the first half and by software deal slippage towards the end of the period. In each case, we initiated detailed recovery plans. Furthermore we continue to modernise our business systems, processes and structure to create a more robust and forecastable business. More positively, SDL took a number of significant strategic steps forward in 2017, most notably the major investment in our automation programme (“Helix”), the divestment of non-core businesses, the launch of neural Machine Translation and the strong growth of our premium verticals.”

Commenting on the outlook for 2018, Adolfo Hernandez, CEO said:

“As expected, we enter 2018 with another packed agenda. We will be rolling out Helix to our Language Services business and we expect to see the benefits of productivity and margin gains in the second half of the year. We will continue to focus on sustainable sales growth, through account management and by extending our premium solutions strategy. In our technology businesses, we have a number of key launches and we will continue to make the investment required to modernise our platforms and products. Operationally, we are focused on improving our infrastructure and Business Intelligence and we will monitor the cost base and drive efficiencies where we can. We have a sound strategy to take SDL forward and a significant market opportunity to pursue. We are highly cognisant of the need to balance growth, investment and profitability through this period of transformation.”

To see the full press release, please visit the investor relations section of our website

About SDL PLC

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.

1 Adjusted profit before tax is calculated before amortisation of intangibles and exceptional items.

2 Adjusted earnings in the earning per share calculation is based on profit after tax and before amortisation of intangibles and exceptional items (net of tax) and before tax exceptional items. A reconciliation of the adjusted earnings per share calculation is set out in Note 7 to the preliminary financial information.

3 Constant currency movements are calculated by applying 2017 monthly exchange rates to the corresponding 2016 monthly results. Average rates for the year for the Group’s two principal foreign currencies are set out in the Interim Chief Financial Officer’s Review

4 Current year revenue earned from prior year customers as a percentage of current year revenue; the difference between RRR and total revenue is revenue from new customers

5 Annualised revenue from existing contracts which includes term licence fees, SaaS licence fees, support and maintenance and hosting.

Contacts

SDL plc
Adolfo Hernandez, CEO
Xenia Walters, Interim CFO
01628410100
or
FTI Consulting LLP
Edward Bridges/Emma Hall
02037271000

Release Summary

SDL PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2017

Contacts

SDL plc
Adolfo Hernandez, CEO
Xenia Walters, Interim CFO
01628410100
or
FTI Consulting LLP
Edward Bridges/Emma Hall
02037271000