Oxford Metrics and the ‘augmented age’

That is all positive news for Aim-traded microcap Oxford Metrics (OMG), whose Vicon business is the global leader in high-precision motion measurement analysis. Vicon serves thousands of customers across various sectors, including Guy’s Hospital in London and the space agency Nasa. And its software is used across an increasing number of applications, ranging from the more established areas of medicine and Hollywood movies, to lesser-developed fields such as virtual reality.

Oxford Metrics’ revenues are diversified not only by Vicon’s assorted client base, but also via the existence of its other business – Yotta. The latter, which makes up a fifth of group sales, provides cloud-based asset management software to central and local government agencies, among other infrastructure owners – helping these authorities to manage their highway, pavement and lighting networks.

The group has also been focusing on bolstering the proportion of its sales that are recurring in nature – improving revenue visibility. As part of its five-year growth plan, it aims to triple repeat revenue by 2021. And, demonstrating progress on this strategy, Oxford Metrics (namely Yotta) achieved annualised recurring revenues (ARR) of £6.2m in 2019 – up by more than a half from a base of £4m in 2016. This figure had grown to £6.5m by the end of December.

That expansion in ARR reflects Yotta’s journey towards becoming a subscription-based business. True, the transition away from perpetual licences did put a dent in Yotta’s revenues for 2019 – coming in at £7m, down from £7.3m. On top of that, there were some delays in customer implementations. Pre-tax losses for the division landed at £1.5m, wider than the losses of £1m seen in 2018. But the group noted within its results that ARR represented more than three-quarters of all current operating costs, giving a solid foundation to expectations of a profitable year ahead.

Vicon's revenues climbed by 16 per cent in 2019 to £28.3m. Pre-tax profits rose at a similar rate to £6.3m. Within the business’s established markets, it achieved record revenues – up by 12.3 per cent. Meanwhile, so-called adjacent markets – those that are still in their relative infancy – made up 6.6 per cent of divisional revenues in 2019, up from 3.4 per cent in 2018, and just 0.1 per cent in 2017.

At the September year-end, Vicon had nine partners in the location-based virtual reality marketplace (whereby VR experiences are delivered on site in shopping malls and theme parks). In elite sports, another ‘adjacent’ area where Vicon provides a lower-limb load monitoring software programme, it grew SaaS revenues via new customer wins with basketball, football and baseball teams. Ultimately, Oxford Metrics aims to see Vicon’s software installed on a range of other platforms – “empowering the augmented age”.