Chief Executive's Statement 2018

A few words from Jay Patel | Chief Executive Officer

I am pleased to report that we have recorded another year of financial, operational and strategic progress across all regions of the Group. We continued to grow year on year, generating strong cash flows whilst investing in ongoing product innovation and IP, sales and marketing activities and new commercial partnerships. 

Our acquisition of Sumotext in November 2017 offers us a platform from which to grow our position in the US enterprise market and the acquisition of Healthcare Communications has significantly strengthened the Group’s presence in the public services sector in the UK. 

Market overview

Digital and mobile technologies have changed the relationship between customers and service providers in all sectors. This disruption has created an opportunity for a new generation of technology and software providers. 

In particular, the smartphone has altered how people communicate with each other – Text, Voice Over Internet Protocol (VOIP), Whatsapp, Skype, Facebook Messenger, FaceTime – and we believe that these technologies will dramatically change how businesses communicate with their customers. A recent 2018 Ofcom report published found that adults are now more likely to use a smartphone to go online (70% vs. 66% in 2016) – particularly 35-44s (90% vs. 82%) and 45-54s (83% vs. 73%)¹. Business to consumer messaging will need to be more real time, personalised, event driven, intelligent and highly visual in order for businesses to capitalise and provide a better end to end customer experience. Enterprises that embrace the changes in consumer behaviour and new technologies can both improve customer experience and cut operational costs. 

The need to communicate and interact with customers better is a key component of the digital transformation initiatives that are a board level agenda item for most large corporations. IDC forecasts digital transformation spending to reach a compound growth rate of 17.5% from 2016-2021. As part of this agenda, there is an inexorable move from physical infrastructure (high streets, call centres, humans) to virtual infrastructure (mobile commerce, self-service, artificial intelligence). In fact, Gartner predicts that by 2020, 85% of all customer interactions will be handled by Artificial Intelligence.

. However, businesses face huge internal challenges, particularly within their IT departments, to keep up with the pace of technological change and require solutions from third party providers to connect their existing systems together and take full advantage of the emerging new technologies. 

Our vision of the world is one in which consumers are delivered great experiences by enterprises through continuous, seamless engagement, powered by best in class software and automation. Our goal is to be the leading global provider of mission critical software, infrastructure and services that manage the digital interactions between our clients and their customers.

Products and Technology

We aim to enable our clients to continuously improve customer experience through the use of technology to better communicate, interact and automate. This allows our clients to manage the interactions between business systems and consumers, on any communication channel, on any connected device, anywhere in the world and at any time. 

During the year to 31 March 2018 the Group increased investment in its innovative products and platforms. We have announced the addition of RCS (Rich Communications Services)¹ Business Messaging capability and introduced a Consent Management solution to help our customers comply with the new General Data Protection Regulations (GDPR). The Group continues to invest in artificial intelligence and automation capabilities with several implementations currently ongoing for our IMIbot.ai product. 

IMIconnect

IMIconnect is a cloud based software platform that helps time and resource constrained IT teams to quickly and easily automate customer interactions across communications channels such as SMS, Voice, Facebook and other messaging applications, and link those interactions with backend business systems. The platform has a visual ‘drag and drop’ tool so users can build workflows with ease, reducing the time, risk and complexities inherent in a traditional programming-intensive approach. IMIconnect is a key enabler for digital transformation and a key foundation for future growth. 

IMIchat

IMIchat is a cloud application that enables contact centres to improve their customer interactions whilst optimising their operational costs and efficiency. This product allows for real-time agent interactions for either customer support or sales across multiple message channels. 

IMIcampaign

IMIcampaign is a cloud campaign management software application designed for multi-channel marketing communication. It allows marketing departments to create, manage, deploy, monitor and adapt marketing campaigns targeted at a customer’s mobile device. Channels supported include SMS, MMS, email, social media, mobile internet, push notifications, USSD and outbound voice. 

IMIdigital

IMIdigital helps organisations to offer mobile content and rich media services such as video streaming, content downloads and self-care to mobile devices across multiple touchpoints. The platform enables delivery of digital services for government and telecom organisations. 

IMIbot

IMIbot.ai is a product built for automating conversations across digital channels (chatbots). The solution brings together the best global libraries of artificial intelligence, proprietary domain insights and tools to equip businesses with the ability to create menu or NLP (Natural Language Processing) driven chatbots. These bots can engage customers across multiple messaging channels and automate significant aspects of the customer service experience. 

Textlocal

Textlocal is a cloud-based, self-serve platform that allows SMEs to have instant, affordable access to SMS messaging and mobile marketing tools. The platform is easy to sign-up for and begin deploying mobile messaging campaigns and services without the need for advance training. 

NMX

NMX is a solution for mobile operators to manage connectivity and volume of messaging across their network. NMX improves operational efficiency and reduces load on the core operator network. NMX enables operators to monetise messaging traffic terminating on the network, reduce grey route and fraudulent traffic and delivers rapid ROI. 

Envoy Messenger 

Envoy Messenger delivers high-availability, critical and secure patient communications across digital and voice channels. As well as sending proactive communications to patients, the software provides dashboards allowing healthcare managers to analyse efficiency and effectiveness. 

Infrastructure and Services

We have adapted our platform and product architecture to take full advantage of public cloud infrastructure and provide flexible deployment options to our enterprise clients including public cloud, private cloud as well as hybrid models. In the last year, as well as our Amazon Web Services (AWS) deployments in the EU, we have also deployed our core products in AWS US to support new clients in North America. 

In addition to this, we have streamlined and standardised our IT Service Management processes using ServiceNow across all regions. With GDPR regulations having come into effect this year, we have made a number of data security enhancements to align with the new requirements, particularly focussing on the way in which we handle Personally Identifiable Information (PII). 

We have implemented enhanced monitoring and alerting capabilities by integrating our cloud products with an ELK (Elasticsearch, Logstash, and Kibana) based monitoring system to provide service-specific business level monitoring for our clients. 

Our cloud infrastructure and applications today process 42 billion messages per year, 12 billion voice flows and 44 billion commerce transactions. 

Sector Overview

Mobile Operators 

Mobile Operators represent our largest customer vertical. Our cloud communications product set and infrastructure is embedded within existing systems to enable operator groups to intelligently connect with their customers through their favourite channels with real time, personalised and contextual interactions. Our digital solutions enable operator groups to deliver content and build revenue streams. 

We have long-standing relationships with the largest mobile operator groups across the globe, including Orange, EE, Telenor, Ooredoo, Telefonica (O2), Vodafone and MTN. 

Our telecommunications infrastructure offering has been significantly strengthened by the acquisition and subsequent rebranding of IMImobile Intelligent Networks (formerly Infracast) through their NMX offering. We now have several initiatives to help operators introduce the next generation of messaging products that improve Application-to-Person (A2P) SMS messaging and introduce RCS. 

Financial Services 

The banking industry is going through unprecedented levels of change. Advances in digital and mobile technology, coupled with changing consumer behaviour and more stringent regulations (PSD2 and MIFID) have fuelled industry disruption. We work with major financial institutions, directly and through channel partners, to seamlessly mobilise their service offering. As a group, we work with 4 out of 5 tier-one retail banks in the UK, 6 of the 8 biggest banks in South Africa as well as banking clients in India. 

Our cloud software and services enable customers to obtain account information, make payments and transfer money by delivering information and reminders directly to mobile devices. Additionally, we have implemented solutions for major banks that puts mobile and interactive text messaging at the heart of the fraud validation process. Suspect transactions trigger an automated interactive SMS to be sent to customers to verify the transactions. The solution has been welcomed by customers as a fast method of ensuring their accounts are secure. 

Banking clients also use our IMIchat application to improve contact centre productivity and raise customer satisfaction levels by enabling digital communication and therefore reducing inbound call traffic and thereby reducing operational costs. 

Logistics

We work with some of the largest logistics providers in the UK, providing them with the opportunities to communicate proactively with their customers at all stages of the delivery process to improve customer experience. 

Logistics providers integrate IMIconnect into their delivery systems to send real-time updates to customers scheduling deliveries and collections whilst also managing delivery agents in the field. We have secured a new contract this year with one of the UK’s largest logistics providers and have established a leadership position in the sector. 

Utilities 

We now work with 4 out of the 6 largest utility providers in the UK, including long-standing relationships with Centrica and E.on. 

Energy firms and utilities are also facing challenges from industry regulator OFWAT which sets customer satisfaction targets that they must meet or face financial penalties. It is therefore vital for utility providers to deliver excellent service while reducing operational costs through technology. 

IMImobile provides multiple solutions for energy and utility companies that automate the billing and collections experience, establish mobile alerts to warn customers in advance of problems in their area, manage engineer call outs and increase operational efficiency through an automated smart meter reading solution. 

Retail & Leisure 

We work with many retailers and leisure companies in order to improve and automate their customer experience. Mobile and digital channels have become the most commonly used and effective touch point for retailers to gain consumer attention and turn that engagement into sales. IMImobile helps retailers to link the in-store experience with mobile apps, virtual loyalty cards and mobile coupons. 

Our IMIconnect platform enables customers to be kept up to date about their orders and collections using real time updates, seamlessly integrating with back end logistics systems to streamline processes and therefore increase operational efficiency. Working together with IMIcampaign, the platform can also deliver targeted and personalised mobile marketing to increase footfall in stores, drive purchasing and convert abandoned baskets into actual orders. 

The automation of our campaigns in line with key events in a customer lifecycle, for example delivering a highly targeted message when they are located near a store, drives stronger customer loyalty and ultimately more revenue for our customers. 

Healthcare & Public Sector 

It is widely recognised that the public sector is under ever-increasing pressure to cut costs so government bodies must find lower cost, innovative ways to deliver public services in an operationally effective manner. Our software enables ‘mobile government’, connecting public bodies to individuals across multiple communication channels, including SMS, MMS, email, voice, social media and chat services. 

IMImobile’s IMIconnect platform improves service delivery with new mobile services and better field force management, for example, collecting feedback from ground staff to provide real-time and accurate updates on services. IMIchat also enables public bodies to respond to complaints faster, keeping citizens updated with the results via a mobile device. In India, we work with the Government of Karnataka and the Government of Telangana. 

As previously mentioned, the Group’s position in the Healthcare sector in the UK was significantly bolstered by the acquisition of Healthcare Communications in December 2017. Healthcare Communications works with over 140 NHS trusts providing communications services to patients via SMS, IVM, telephone and email through its internally-developed Envoy platform as well as providing postal and portal communication channels. Its innovative services are proven to save the NHS time and money to improve the patient experience. Recent published statistics suggest that patients missing their appointments costs the NHS up to £1 billion per year¹. 

Regional Performance

The Group is managed commercially and strategically on a regional basis with centralised resources for software development, finance and general management. A key operating metric for each region is gross profit as there are considerable differences in gross margins across regions, vertical sectors, product lines and revenue models. Gross profit additionally measures most directly the value of the software and associated services delivered by the Group which excludes the impact of network infrastructure, third party hardware and content costs. 

Europe and Americas

Gross Profit: £31.3m (2017: £22.9m) 

Gross profits in this region have risen by 37%. This growth was generated by established customer relationships, new contract wins and delivery of innovative and scalable solutions to blue chip clients, as well as contribution following the acquisitions of Infracast, Sumotext and Healthcare Communications. We have consolidated our position as the UK market leader for digital and mobile interactions across major industry verticals. 

There have been major new deployments in the region within the mobile operator, retail, logistics and utilities sectors and these will support growth in the coming financial year. We have also seen success in upselling to the customer base of IMImobile Intelligent Networks, who we acquired as Infracast last year, and we hope to build on this in the coming year. 

We have started to get some momentum from our partnership strategy with an increasing number of opportunities being initiated by the likes of BT, KCom, InContact and SITA. We expect more commercial progress in the coming year. 

Textlocal continues to perform well, with year on year gross profit growth of 15%. Over the last year, we have successfully secured several new major relationships within the gaming, finance and insurance markets. We have also further invested in our reseller strategy, securing many new partnerships within the telecom, marketing agency and email service provider markets. 

The Group’s presence in the US, the single largest addressable market for our product portfolio, was enhanced by the acquisition of Sumotext, a provider of mobile messaging solutions for government, travel, retail, healthcare and non-profit organisations. Building on the Group’s existing relationships with US mobile operators, we plan to use this platform to further leverage IMImobile’s cloud communications product suite in the US market. 

Middle East and Africa 

Gross Profit: £11.2m (2017: £13.5m) 

Gross profits in this region have declined by 17%. Several new long-term contracts in the mobile operator, banking and broadcast sectors provide a healthier outlook for the region, but, as anticipated, did not fully offset year on year declines in gross profit as a result of currency headwinds created by the Nigerian Naira and the full year impact of the MTN contract renewal. 

We have successfully rebranded Archer, our acquisition in 2015 to IMImobile South Africa and have successfully cross-sold our cloud product set, most notably to the second largest retail bank in South Africa. 

We remain confident of significant long-term growth in the region. There is significant momentum going into the new financial year, particularly in the enterprise market in South Africa, with a strong pipeline of new deployments and opportunities which should be capitalised on in the upcoming months.

India and SE Asia 

Gross Profit: £8.2m (2017: £7.0m) 

There has been growth across all business units in the region, with gross profits rising by 18%. Our main sectors in this region continue to be operator, enterprise, brands and agencies and government. 

Growth in the region has been driven by successful deployments for the Telenor group in multiple territories including Bangladesh and Thailand as well as a further client win in the public sector, who have launched our mGovernance platform, delivered on IMIconnect, for its citizens. 

Textlocal India has also experienced strong growth, it has doubled its customer base in the past year meaning it has over 18,000 paying customers since its launch two years ago. 

Growth strategy and outlook 

We believe that there is no clear category leader today in our markets and that there is a global opportunity to be at the heart of digital interactions for enterprises. Our strategy is to be the market leader in the markets we operate in for customer interaction and automation platforms. This strategy will need to be executed on a regional basis due to the different maturities in the markets we operate in. 

To achieve this goal, in a period of accelerated change, we need to continue investing in our platforms and IP as well as innovating on new technologies. We believe we can grow consistently on the customer foundations that we have established through increasing the penetration into our existing accounts. We expect to manage more interactions both through consolidation of existing communications and through creating new user journeys that help our clients service customers better and save money. Over the last few years, the number of customers that generate annual revenue over £0.5m has consistently grown. This year, 33 customers generated over £0.5m compared to 27 last year. 

In order to win new clients, we will continue to invest and accelerate efforts in building our direct sales organisation as well as our expanding our partnership strategy through which we would expect to accelerate growth. 

As a result of these initiatives, we believe that we can deliver consistent organic growth in the coming periods. The 2019 financial year has started well with trading in line with expectations. We continue to have good earnings visibility due to our established client relationships, healthy pipeline of new deployments and high proportion of recurring customer revenues. 

The acquisitions we have made have performed well and, whilst maintaining our disciplined and selective approach to acquisitions, we see further exciting opportunities to take a leading role in the consolidation of this sector.

Jay Patel 

CEO