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Proactis's changing mix has deferred revenue, but increased security

The e-procurement and spend-control software specialist signed multiple service contracts
April 27, 2016

Macroeconomic uncertainty and tightening budgets have piled pressure on organisations to control their outflows and manage their suppliers more efficiently. Strong demand for electronic procurement and spend-control software drove adjusted cash profit at Proactis (PHD) up 4 per cent to £2.4m in the first half of its 2016 financial year. But a sharp slowdown in revenue growth prompted investors to send its shares down 8 per cent.

IC TIP: Hold at 128p

Proactis inked 23 contracts with an initial value of £3.7m in the period. More importantly, 14 of those were multi-year subscription or managed services deals, meaning the order book swelled by a fifth to about £24m. However, management's focus on longer-term contracts meant sacrificing short-term sales growth.

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