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cloudBuy's motto to be "show me the money" as it jettisons under-performing projects

Published: 08:21 22 Mar 2017 GMT

E-commerce
The company has already stopped some non-performing contracts

Online business-to-business marketplace creator cloudBuy PLC (LON:CBUY) is to be a lot more hard-nosed in pursuing new customers after a tough 2016.

The company has, perhaps, been guilty of adopting a scatter-gun approach in the past when chasing new business, but it has learnt its lessons and changed its focus to projects that have a larger upfront fee, as this mitigates the risk for cloudBuy and provides a larger incentive for the customer to continue through to the transaction revenue phase.

This strategy proved effective in 2016 with four new customer contracts won, all with large customers providing ongoing software-as-a-service (SaaS) revenue.

Two of the contracts were for marketplaces that include the opportunity for transaction based revenue and are with customers who have credible investment plans to drive the success of their marketplaces, said cloudBuy's executive chairman, Ronald Duncan.

Unfortunately, it was a bit of a case of two steps forward, two steps back for cloudBuy on the revenue front, with two major contracts ending during the year.

Revenue was in line with market expectations at £1.71mln, down 2% on 2015's £1.75mln.

Sales of web and e-commerce services increased by 12% to £1.17mln from £1.04mln but revenue from company formation services decreased by 20% to £492,542 (2015: £616,566), reflecting Companies House's continued increase in market share in electronic formations.

The revenue focus for 2017 will be on the PHBChoices UK Care Marketplace and existing customer implementations and transaction revenue, Duncan said.

Despite strong progress on the cost-cutting front – admin expenses tumbled to £4.78mln from £6.88mln in 2015 – the company recorded a loss before tax of £4.27mln, compared to a loss of £6.06mln the year before.

“The medium to long term outlook is positive based on the lower cost and more effective operating model, " Duncan said.

The group ended the year with cash and cash equivalents of £1.04mln, up from £754,217 a year earlier.

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