Instem PLC (LON:INS) saw its shares rise on Tuesday after the firm, which creates and sells software used by drug developers, said orders for its SEND platform grew 500% year-on-year as it told investors that 2018 trading had been in line with forecasts.
SEND stands for Standard for the Exchange of Nonclinical Data and demand for the system benefited as clients upgraded and extended their use of the company’s products.
Instem said all three areas of the business - data collection, regulatory solutions and informatics – made “positive contributions” as it reported profit margins had strengthened.
Customers are now shifting away from the software licence model to recurring, software-as-a-service, which aids customer retention and allows users to incrementally build the list of services it buys from the AIM-listed group.
Heavy investment pays off
"Instem has invested significantly in the business in recent years and these results further illustrate such investment converting into profitable growth,” said chief executive Phil Reason.
“In addition to a host of new client wins, many existing clients have extended their use of Instem's products and services and, importantly, have transitioned to our SaaS solutions.”
The company said it ended the year with £3.6mln, which will increase as delayed payments from a small number of large pharma customers are received.
This, Instem added, will return the company to “more normal working capital cycles”.
In the update, the company referred to an ongoing German legal dispute due in court for an initial hearing on Tuesday.
Instem said it is defending the action. It didn’t go into the details of the case, but said it does not affect its “ongoing operations”.
While it believes the action should be dismissed, a provision against the cost of litigation made in 2017 will stand in the 2018 accounts.
In early afternoon trading, Instem shares were 7.5% higher at 273p.
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