ISA Holdings' turnover in the first six months of the year is almost on par with its previous full-year earnings, after it boosted its top line by 57%, thanks to large deals.
The group says in its results commentary that "this dramatic upturn" is mostly due to a few large new solution sales. New solution sales are what ISA calls large deals, which usually make up around 40% of revenue.
In the six months to August, revenue gained from R30 million to R47 million, while net profit improved to R7.4 million, from R5.3 million.
However, the company points out the "timing of these large deals is somewhat unpredictable and has an unnerving way of exaggerating our figures to the upside, if achieved in a specific reporting period".
At year-end, turnover dropped 19%, to R51 million, due to a lack of large deals, although its run rate held up.
CEO Clifford Katz says, stripping out the spikes and troughs caused by large deals, ISA's "run rate" businesses gained. During the first half, the group's services, managed security and recurring income all gained. "That's what makes me happy."
Recurring revenue grew 16% and accounts for 58% of total revenue.
Pipeline growing
ISA defines large deals as accounting for 5% or more of turnover and it usually inks two or three in a period. This half, however, the company was "big deal heavy," says Katz.
Katz says one deal alone was worth R10 million. The security solution company typically gets in two deals that amount to 10% of turnover, and one worth 15% of revenue.
For the second half, there is a good pipeline as its corporate clients have been planning ahead, a trend not seen last year, says Katz. He is more optimistic than previously and expects a "credible" second half, although he would be surprised if it was near the first six months' figures.
ISA is also teaming up with integrators, such as T-Systems, to take its solutions to their clients, says Katz.
The company, which did not declare a dividend, ended the first half of the year with cash and cash equivalents of R25.4 million, a slight gain on the R21.9 million it reported a year ago.
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