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18 October, 2017 - 15:00 By Tony Quested

Ubisense grabs cash and growth opportunity

Ubisense CEO Richard Petti

Cambridge technology business Ubisense has raised £5.5 million growth capital and clinched a £1m order from a German automotive manufacturer.

CEO Richard Petti says it needs the new cash to expand its product range and, thereby, its market reach through fresh sales.

Management say that without raising new money it could have been in danger of breaching banking covenants and would have had to throttle back on its intended expansion strategy. It adds that the new German order typifies growing demand for the company’s location technology.

In its 2016 full year results, Ubisense set out a clear software-focused strategy designed to drive sales and improve margins across its two product lines: myWorld and RTLS SmartSpace.

Over the course of 2017, it reports significant progress; Ubisense reported a strong set of financial results for the six months ended June 30, delivering a revenue increase of 16 per cent on the prior period, within which revenue generated by the group's own products increased by 58 per cent.

The directors believe that the dynamics of the group's two key market verticals are strong, positioning Ubisense to capitalise on significant projected increases in spending relating to two themes.

One is Industry 4.0, under which $0.9 trillion is forecast to be invested in smart production technology over the next five years.

The second is global fibre-to-the-home investments, which present significant operational challenges to telecoms operators.  

These strong dynamics are evident in the group's recent contract wins. The directors anticipate further wins in both its platforms to continue to deliver growth of revenues relating to its own products, with a continued increase in the pipeline of enterprise software transactions at higher margins.

Ubisense expects to see a run-off of historic contracted maintenance and development services related to third party geospatial products over the next 12-18 months. Whilst this will provide a headwind to revenues, gross margins are expected to improve as its enterprise software sales continue to grow.

The directors believe that to capitalise on its market success, and as the company moves away from third party services revenue, Ubisense should invest in its sales and pre-sales capacity to drive growth in revenues and margin from its own products.

It also intends to invest in both its software and hardware products to maintain market competitiveness.

• PHOTOGRAPH SHOWS: Richard Petti, CEO, Ubisense

Kiss Communications

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