Johannesburg, 03 Apr 2023
4Sight Holdings (JSE 4SI) today announced strong financial results for the year ended 31 December 2022, despite the challenging economic environment created by the power crisis, continuous interest and exchange rate hikes.
The company reported double-digit growth in revenue, profit and cash on hand following steadfast commitment to its overall business and go-to-market strategy, while leveraging its intellectual property (IP) solutions to drive industry innovation.
For the period under review, revenue increased 20.7%, gross profit rose 10.1% and operating profit grew by 93.9% due to the increased revenue, coupled with improved productivity, governance and control processes, as well as cost containment that saw operating expenses increase by just 4% in a high inflationary environment.
“Our ability to keep operating expense escalations below inflation demonstrates the continued commitment from the board of directors and executive committee to manage the company prudently in a challenging macroeconomic environment,” explains Tertius Zitzke, Group CEO at 4Sight Holdings.
“And despite a R16 million share buy-back, we grew our cash balance by 20.1% in 2022 from the strong growth in revenue,” explains Eric van der Merwe, Group CFO at 4Sight Holdings.
“As a result, headline earnings per share (HEPS) for the period under review increased 35.4% from ZAR1.757 cents per share for the year ended 31 December 2021 to ZAR2.379 cents per share. Earnings per share increased 40.3% from ZAR1.695 cents per share for the year ended 31 December 2021 to ZAR2.378 cents. Net asset value per share rose by 1.3% from 44.1 to 44.6 cents per share,” explains Van der Merwe.
“The dual direct and indirect channel market strategy we implemented in the 2020 financial year continues to deliver strong results,” explains Willie Ackerman, Chief Sales and Marketing Officer at 4Sight Holdings.
“As a consequence, we remain committed to this approach and will leverage this proven strategy to expand further into the markets.”
The company's channel continued to experience strong revenue growth, reaching nearly 800 partners in 2022 to bolster volume in the lower margin segment of the business.
“The compelling value proposition from our solutions, which offer a better user experience compared to other vendors and solution providers, coupled with competitive pricing, deep support, quick turnaround times and accurate billing supports our channel and continues to drive business growth,” explains Ackerman.
While gross profit declined from 47.9% to 43.7% due to a change in product mix with a shift away from capex licensing to more subscription services, 4Sight maintained overall growth in product revenue and supports its strategic drive to achieve more annuity-based revenue.
Ackerman attributes the company's ability to mitigate a drop in revenue and profit due to the latter, to the continued growth in the company's higher margin direct go-to-market strategy, where dedicated internal clusters focus on selling 4Sight's IP solutions into the enterprise market.
The industrial sector remained the strongest contributor to growth, particularly the mining, metals and manufacturing industries.
“As such, we will continue to increase our focus within these verticals as these sectors accelerate digital transformation initiatives to streamline operations and create greater efficiencies to contain costs,” elaborates Ackerman.
In this regard, Zitzke explains that 4Sight Holdings focuses on five strategic pillars to build a customer's business DNA and create a future-ready operation.
“Our strategy focuses on looking at a customer's operation from the outside in, then leveraging technology to craft solutions that drive transformation in key domains within the business, namely people, customers, operations, finance and innovation.”
Innovation-focused transformation supports customers by identifying specific issues, challenges and inefficiencies and developing data-driven solutions to improve efficiencies.
From a people perspective, 4Sight empowers employees to increase efficiencies and productivity by modernising the workplace environment through improved communication and collaboration.
“Creating these capabilities have become critical in the hybrid workplace to monitor and track productivity and performance from remote workers,” elaborates Zitzke.
Customer-focused innovation relates to enabling customer intelligence to accelerate business growth in the modern digital economy through more effective and impactful sales and marketing initiatives and memorable customer experiences that attract and retain customers with less cost and effort.
“By implementing best-in-class solutions, we help our customers digitally transform and optimise their operations based on their unique requirements,” continues Zitzke.
4Sight delivers finance innovation by lifting and shifting ERP solutions to the cloud, which unlocks numerous capabilities for customers. For example, once in the cloud we can transition a company's accounting system from a repository of historical financial data to a powerful business predictor.
“These capabilities can take a business from a reactive operation that makes decisions from a place of hindsight to empowering decision-makers with foresight from predictive capabilities that allow them to take proactive steps in driving the business forward,” explains Zitzke.
4Sight also applies these strategic pillars to its operation to bolster internal resources and tools. In this regard, the company maintained its core focus on improving operations through digital technologies and countering the brain drain currently afflicting the local economy.
“In 2022, we launched an initiative to create domain skills and expertise through an intern programme that is also helping to create job opportunities at a time when many companies are downsizing,” says Zitzke.
In 2022, 4Sight increased its headcount by 20%, equating to 69 staff to reach 416 in total. 4Sight has now employed 48 graduates enrolled in the 2022 graduate programme.
“We expect businesses in every sector will continue investing in digital transformation to re-invent and improve operations as technology has become a core strategic foundation and serves as a key determinant of organisational survival and success,” continues Zitzke.
“As such, we see massive potential for our solutions in the market, particularly in addressing the various challenges businesses face. We therefore remain confident in our ability to continue growing the business into 2023 and beyond,” he concludes.
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