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15 January, 2021 - 13:28 By Tony Quested

Viva AVEVA as firm engineers platform for massive growth

Cambridge engineering and industrial software group AVEVA saw its UK share price take off on the last day of the trading week after an upbeat trading update.

Shares in AVEVA, which has a market cap of £10.84 billion, rocketed 225p to 3,782.50 GBX following a terrific performance in the nine months to December 31. 

AVEVA had a strong quarter of contract renewals in the three months to December which helped to improve revenue growth to approximately 1.5 per cent in the nine months under review on an organic constant currency basis. On the same basis, recurring revenue grew by 10 per cent, taking it to 68 per cent of overall group revenue in the period.

Organic constant currency revenue growth in the three months to December 31 was over 26%. This was driven by a significant number of scheduled subscription renewals, including a large three-year contract renewal in the food sector.

The business also benefited from the early renewal of a large three-year EPC contract that had been scheduled for AVEVA’s Q4, and the conversion of two large contracts in the marine sector from annual fees to multi-year subscription, giving the customers more flexibility in a challenging marine market environment.

AVEVA says the order pipeline for the remainder of the financial year is solid, supported by efficient digital demand generation and several large contract renewals, albeit fewer than seen in the third quarter. 

AVEVA ended the period with £2.7 billion of cash – mostly held in US dollars – and no debt, reflecting the proceeds of the Rights Issue ahead of the completion of the OSIsoft acquisition.

Notwithstanding the disruption seen to the trading environment in 2020, the trend towards the digitalisation of the industrial world is strong and the board says it remains excited about the significant growth opportunities ahead. The acquisition of OSIsoft is expected to be wrapped up in early February.

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