Delcam optimistic about 2010

Delcam plc, a UK-based developer of CAM solutions, reported on Monday that revenue for 2009 declined 3% to £31.8 million but, as the company points out “still represented the second-best turnover in the company’s history and stood 7% higher than sales in 2007”. Delcam reports that it saw good growth in some of its newer market sectors, including medical and dental. The company decided last year to increase its investments in R&D and marketing during the recession; coupled with lower revenue, this led to a halving of profit before taxes.

Software revenue declined 9% to £15.03 million; services revenue fell slightly to £5.23 million even as recurring software maintenance and support revenue was up 10% to £10.71 million. Recurring revenue sources now account for 34% of sales.

On a geographic basis, revenue from Europe declined 4% to £17.94 million; revenue from the Americas decreased 8% to £7.67 million, while revenue from the Far East grew 2.5% to £6.20 million.

Delcam expects improvement in profitability in current financial year, driven by the sustained growth of recurring revenue from software maintenance and support and the uptick in new software sales in the latter part of 2009. Said Chairman Peter Miles in a prepared statement, “Uncertainty over the timing and strength of the recovery in the global economy continues to make it more difficult than usual to forecast accurately. However, the continued growth of recurring revenues, from annual software maintenance and support income, and the increase in new software sales in the later part of 2009 give us cause for confidence.”

Investors expected better performance (and likely a higher dividend), sending Delcam’s share down 10% for the day to 197.5p.