cloudBuy (AIM: cbuy.L), the cloud eCommerce marketplace, today provides an update on trading in the six months ended 30 June 2014.
Trading in the first six months has been in line to achieve market expectations for the full year, with spend analysis and eProcurement invoicing growing by 50%. A large part of the invoicing was at the end of the period and this invoiced revenue will be recognised in future periods, so that recognised revenue for this period will be similar to the first half of the prior year.
cloudBuy has made demonstrable progress in each of its three key target opportunities; these being global expansion, social care and health. The investment in global expansion has resulted, as anticipated, in an increased loss for the period, but this is offset by a strong pipeline of contract wins that the Board expects to deliver in the second half of the year.
cloudBuy has analysed over $10bn US Dollars of spend in Asia Pacific in the first 6 months and this has provided good visibility of the future pipeline across the large participating organisations. A number of these are government organisations which have been through a process of validation and testing over the past six months, prior to releasing data and creating business cases for the implementation of the cloudBuy marketplace.
The Company's roll out plan was initially focused on Australia, New Zealand and Hong Kong. cloudBuy is on track with projects underway in Australia and Hong Kong, and late stage prospects in New Zealand. The team in India has expanded its focus from back office support to sales and the Company has a good pipeline of opportunities with large Indian companies and global corporates, building out from the first smaller customer. cloudBuy continues to work closely with Visa Asia Pacific and its member banks to develop this market.
In both India and Hong Kong the Company has opportunities which require the marketplace to also support local taxation, language and cross border trading in a single global solution. This is particularly important for global corporations and is not catered for in any existing solution apart from the cloudBuy solution. The Company has been working to enhance the platform to support these activities and currently the marketplace and supplier solutions are being translated into Hindi, and traditional and simplified Chinese to meet customer requirements.
cloudBuy has had requests from corporate and government bodies in the Middle East and Africa for spend analysis and marketplace solutions. Following two successful visits to the region it is clear that there are good opportunities in the Middle East with the potential for a live project in the second half. Oracle has a major footprint across public and private sector organisations in the Middle East and in response to the projects identified the Company has become an Oracle Gold Partner, in order to better service these opportunities. cloudBuy also has unsolicited live opportunities in North America, which remains a focus for the future.
During the period the Company secured a number of contract wins in Social Care with 'thought leading' councils and has now established itself as a market leader in this rapidly growing segment, where over 80% of the available market has yet to choose a solution. In tandem, the NHS is implementing personal health budgets and cloudBuy has built on its existing relationship with NHS Shared Business Services to offer the 211 Clinical Commissioning Groups (CCGs) a solution, with a potential market value of 5 million people at £60 each per annum. cloudBuy are the only eMarketplace provider that is accredited by the NHS to hold patient data, and already integrated into NHS SBS giving the company a competitive advantage.
Health Minister Dr Daniel Poulter MP recently commended cloudBuy's work with NHS Shared Business Services at the Local Government Association Conference and the Company subsequently received strong interest from delegates at the conference into the joint national solution for local authorities with Northamptonshire County Council and The Grass Roots Group PLC. The projected revenues from this partnership are up to £1 million per annum to cloudBuy per local authority.. With over 90 authorities yet to choose a solution this represents a major opportunity for the Company.
The NHS has now created its new procurement strategy and Health Minister Dr Daniel Poulter MP pointed out to delegates at the Local Government Association Conference that cloudBuy is expert in this area, has an existing contract with NHS Shared Business Service that can be used immediately and can actively help the NHS achieve its efficiency targets. cloudBuy and NHS Shared Business Service have already identified over £2 billion in annual savings for the NHS. NHS progress towards action has continued with the recent price benchmarking website launched by Dr Daniel Poulter MP on 22 July, which increases the opportunity to select cloudBuy's ready-made solution.
Ronald Duncan, Executive Chairman, commented: "We are pleased with the progress made in the first half of the year. The new team has bedded in and is driving increasing numbers of new prospects. The scale of each of our current opportunities gives me the confidence that we have three ways to achieve our 2-4 year objective of £50m revenue at 90% margin, and organisationally we are focused on the actions we need to undertake to ensure that we deliver on this objective. We have made the transition to a transactional charging model with our new prospects, which longer term will drive larger and more sustainable revenues than our traditional licence model. The economies of Asia Pacific and the Middle East are very strong and there is a clear appetite for our solutions, coupled with a limited installed base of existing solutions. It is always difficult to establish the first live project in a new business area or geography but we have achieved this with live clients in Asia Pacific to give confidence to our prospects, we anticipate faster closure across the pipeline."
The Company expects to announce its interim results for the six months ended 30 June 2014 on 21 August 2014.