Pilat Media, the group which makes business management software for the broadcast industry, says demand for new services from existing clients has driven a big increase in like-for-like sales.
In the first three months of the year revenues were £5.05m, the same as the the same period of 2011, but that quarter included an exceptional gain of £454,000 on the resale of Oracle licences, meaning like-for-like sales gained 10%.
Historically, Pilat has provided two services: the first is scheduling software, so a broadcaster knows what's being broadcast at what time on what channel; the second is a set of systems designed to help manage commercial advertising.
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Speaking to Sharecast, Avi Engel, the Chief Executive Officer, explained that the broadcast industry has now changed, so that instead of scheduling on regular TV channels, clients like the BBC, CBS and Discovery need to control content going to smartphones, tablets and home computers: "It's a factory out there, we're managing a more complex factory", he says.
The word factory hints at the tools clients now need because their content may need to be edited before being broadcast or streamed, so Pilat's software now incorporates production capabilities.
It's fair to say the firm has had a tough few years, down 64% since its peak in 2007, and 37% in the last 12 months, but the brighter picture on sales this quarter perhaps suggests the firm can reclaim its former glories.
Profits after tax for the quarter were £19,000 against a loss in the prior year of £190,000, with cash generation at £0.5m during the quarter.
The strategic problem faced by Pilat is that the big players in broadcasting are changing their spending patterns. Engel says in the past "broadcasters would spend tens of millions (for investment) 20 years ahead, those times are over". Instead major customers "now spend less in shorter increments".
Pilat is countering this trend by widening its net, getting an increasing number of smaller transactions. Counter-intuitively many of these are coming from Europe which Engel describes as "not a concern"; in fact he has just completed a "nice order from Greece". The fact a Greek company is willing to part with its cash is evidence of Pilat's claim that its software is mission critical: "when they need it, they have to buy it" says Engel.
During the first quarter the gross margin increased to 45.3% but this is still below the annual average - partly because of the cost of implementing new systems - but Pilat will be happy that it can now boast US telecoms giant AT&T and cable network player Showtime as clients.
The market is pretty happy with the first quarter numbers too. At 11:45 the stock had gained 8.7%.
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