Cirata plc (CRTA) Earnings Call Transcript & Summary

Talk us through the Q4 highlights as you see them, Stephen.

There's probably 3 things to mention. First of all, the cash balance was better than we anticipated, and that was down to good collections and strong cash management. Second, bookings were within the range that we published and some good particular momentum on the comparable of last year when we did $2.2 million, which showed some decent growth, both comparable, but also sequentially on Q2, Q3 and into Q4. And the final thing is getting ready for FY '24 with the turnaround plan. We've now realigned the go-to-market resources, which we'll talk about, to make sure we're much more focused externally to manage more predictable sales cycles.

And then talk us through the financial performance in Q4.

So we're looking to close Q4 with about $2.7 million of bookings. That compares to $2.2 million, which we did in Q4 2022. That's a 23% growth year-on-year. In terms of how that compares to the guidance that we gave, which is the sort of $4.3 million to $6 million of bookings in the second half of the year, we would have done around $4.4 million of bookings. That shows our progress on 2 accounts. One is progress on a quarter-on-quarter growth. So we would have grown sort of Q3 off of Q2 and then Q4 against Q3. So showing progress through the year. Secondly, it also shows progress across the 2 lines of businesses. So we've grown the business -- the DI business, Data Integration business, quarter-on-quarter since Q2. And we've also grown the ALM business quarter-on-quarter since Q2. Secondly, we also guided on cash position at the end of the year. I'm pleased to say that our closing cash position would be at least $18 million. That is a strong performance against our guidance range of between $16 million and $16.5 million. That's been driven by 2 factors. Number one, we've done very well at collecting cash. So we've done better than what we had forecasted when we get the range. And secondly, we've also done a lot better on managing our cost base. So those 2 things have led to a strong outperformance on the cash position at the end of the year.

And in terms of future disclosures, when can investors expect the next update?

So we're looking to publish the full year results between the middle of March and the middle of April. And within that, we'll also give guidance in terms of bookings and cash position for 2024. As Stephen has said, we're still firmly focused on closing the year on a cash flow breakeven position. So we're generating positive cash as we move into 2025. In terms of the RNS announcement, you would have seen that we've taken out the key performance indicators table. The KPI table will start publishing that on the website, which will allow us to announce our quarterly updates very quickly after the quarter has ended.

So the idea is to overcommunicate.

Yes. And we're very transparent in terms of our communication. You would have seen throughout 2023 after Stephen and I were appointed, we've been very communicative with investors, and we will continue to provide quarterly updates to investors throughout 2024.

If we revisit the turnaround plan, what further update can you give us on that? What's left to do?

Yes. The turnaround plan we shared with the investors during the summer is substantially completed, and we'll share all the results of the 8 work streams when we stand up at the prelims to ensure that everybody is fully cited on that. But we've got ourselves ready a match fit for FY '24, and that was the purpose of the turnaround plan because we really are focused on from FY '24 onwards. Growth and the turnaround plan enable the foundation for that.

And you've mentioned the realignment of the GTM resources. So what's the strategy here?

With the go-to-market resources, what we have struggled to do in the past, and it's fair to say, is we do well working with customers on sales cycles, but what we've failed to do well is actually closed them predictably. And there's been slippage in reality. Now with the go-to-market, what we've sought to do is really flatten the organization. So there's only one level of management between myself, the Chief Executive, and the individual sales person or the sales consultant. And they're represented those individuals by Rich Baker, running International; Chris Cochran running North America; and Justin running the Application Life Cycle Management product line. And therefore, what it means is we're much more focused externally. The activity levels will increase, and that should help us become much more in terms of pipeline growth, but also much more predictable in terms of closure rates.

And you've had a lot to do in the last 9 months. So what else do you want investors to think about right now?

I think there's probably a few elements of the strategy that we're seeing some green shoots associated with that. First of all, on the Data Integration business, where we've landed some new customers, some big logos. So customers like [ Experian ], General Motors, FordDirect, I think that validates the strategy that customers are thinking to move significant volumes of data and that they see Cirata as the best solution for that. Secondly, sort of this land and expand, once we won customers of those marquee names, then what we want to do obviously is expand the usage. And again, good validation of that with companies like NatWest expanding their relationship. And then on Application Life Cycle Management is an area that hasn't been focused on in the past, and we announced as part of the strategy that we are actually breathing new life into that business unit. And with Justin's leadership I'm very confident that we can see that move from basically flat lining towards our growth into FY '24. Then the other 2 things, I think, today validates the strong cash management and discipline the team has really set throughout the company of cost management, but also managing the cash and the working capital. And the final thing was building the executive team for making sure we match fit for growth in 2024.

And what are your personal aspirations for the business for the next quarter, for 2024 and beyond?

I came in during the summer, obviously, when the company sadly at that time was on his knees after the scandal. And we have to thank Ken Lever, our Chair -- Interim Chair coming in and effectively rescuing the company. But also I think it's a great opportunity just to thank all our investors for the $30 million fundraise and their loyalty and their commitment during that period and phenomenal support. Then the other factor looking forward, directly to answer your question, is it's all about growth. So we put the turnaround to get plan together. We've come through that. We've substantially concluded that. And they are the foundations for growth in the Data Integration business and the ALM business, both in the North American geography and international. And I'm very excited about seeing some growth in the ALM business that's been neglected in the past. So we're always saying software growth cures all evil, and I think that is a true statement in many respects, and we want to drive high-quality growth with marquee Fortune 500 companies, and that's my personal aspiration. And with that growth, we'll meet all our expectations to our investors. And ultimately, that really means we exit this year with the company cash flow positive, with momentum growth and the aspiration. Ultimately, this is a big year for growth to get on our journey and our adventure towards global market leadership, which we set out for ourselves as a goal by 2028.