Proactis Holdings (PHD) unveiled to investors that it has signed a 5-year contract with a transportation company in Germany to provide its business spend management solution.
The customer will use Proactis to digitise its procurement processes, possibly offering ‘further potential for new business through invoice automation and workforce management.’
The business spend management solution provider said this contract win represents the third new customer in Germany to sign up under the company’s new go-to market strategy.
In recent weeks, the company said it has seen ‘encouraging growth’ across each of its operations in France, Germany and the US under this previously announced strategy.
In its final results for the year ended 31 July 2020, Proactis outlined at the time that progress against its new strategy had been encouraging with performance in line with Board and market expectations for the year despite the emergence of COVID-19 during the period.
CEO, Tim Sykes said, "We are delighted to have been selected once again in Germany, following successes in North America last month and in Germany and France late last year. We have demonstrated that our go to market strategy, our positioning and our solutions are relevant for our target market segment in each of the territories that we operate in.”
Sykes highlighted to investors that the company can witness “the momentum and volume of business increasing” as its pipeline starts to translate into new contracts more regularly.
He added that, “Whilst conscious that the pandemic continues to impact the pace of our progression, we grow more confident that the market opportunity for Proactis in each of the US, France and Germany is as great as it is in the UK and the Netherlands and that we will continue to see further acceleration of deal flow over the coming months."
Today's news marks the third new contract win for Proactis in Germany which is expected to possess further upselling opportunities via invoice automation and workforce management.
For investors, the contract both underpins the group’s consensus estimates as well as reinforces the group’s 'go-to-market' strategy, which is intended to replicate the success the group has witnessed to date across the UK & Netherlands in the French, German, and US markets.
Shares in Proactis Holdings have ticked up by nearly 5% in value of the past two weeks. The stock was trading 1.05% higher this morning at 43.45p at a modest 1.7x EV/sales vs >6x for the sector.
Reasons to Follow PHD
Proactis creates, sells and maintains software and services, which enables organisations to streamline, control and monitor all indirect expenditure.
Its solutions are used in around 1,100 buying organisations globally from the commercial, public and not-for-profit sectors.
Proactis previously adopted a new go-to market strategy for each of its US, France and Germany territories which is designed to replicate that of the UK and Netherlands.
In its FY20 results last month, Proactis noted that it had made ‘substantial headway’ after seeing the first sales of its mid-market single platform solution in Germany and France.
The group cited a ‘record year’ in new business total contract value ("TCV") after securing an aggregate of £14.6m (FY19: £11.3m), a 29% increase secured in ‘virtually all markets.’
Proactis said this demonstrates ‘the effectiveness of its strategy, the resilience of the business model and the ability of its teams to deliver despite a change in working practices.’
In recent weeks, the company announced that it has signed a 3-year contract with an unnamed major German DIY retailer to provide its business spend management solution.
The business spend management provider said the win represents ‘a strategically important milestone’ as the second new German customer to sign up under that new strategy.
Proactis, whose solutions are used in around 1,000 global buying organisations from the commercial, public and not-for-profit sectors, said the solution will be deployed in Germany initially before being rolled out into new territories through Central and Eastern Europe.
On 10 February, Proactis said it had signed a three-year contract with an oil and gas services business in North America which it said represents “a strategically important milestone.”
While the name of the customer and value of the contract remain undisclosed, the business spend management solution provider said the contract win is significant because the client is the first in North America to sign up under the Group's new go-to market strategy. The contract marks entry into a new significant territory, which is a stated objective for Proactis.
Compelling Valuation Metrics
Proactis is currently trading at a significant discount to its peers on an EV/Sales multiple of 1.6x, against an average of 6.5x for the sector.
Furthermore, Paul Hill, analyst at PMH Capital suggests bePayd has the potential to be enormous, given its 1st mover advantage in providing cash flow benefits to SMEs within this ‘low value’ space.
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