Dundee tech firm Waracle has posted a loss of more than £878,000 in its annual accounts, as it undergoes a series of leadership changes.
The company, which has grown from a team of 10 to 200 over the last decade, said the market for digital product services had slowed in the last year.
It comes as Waracle makes changes at the top, after Chris Martin stepped down as CEO replaced by David Tuck in September.
And director David Romilly this week announced he was stepping back from the day-to-day running of the company after 15 years. He will stay on as a shareholder.
Waracle posted a pre-tax loss of £878,000 to the end of December 2023.
The year before Waracle made a profit of more than £900,000.
Revenue shrunk from £23.3m in 2022 to £15m in 2023, but directors remain sure their underlying business remains strong, with new clients and contracts “in the pipeline”.
Waracle posts loss
In their annual report, outgoing CEO Chris Martin said: “The market for digital product services has slowed somewhat compared with previous years.
“While there is still reasonable demand in the market, contracting cycles now appear longer and there is increasing pressure on rates as customers seek to manage the economic challenges of the last 12 months.
“While we have successfully retained our key clients and continue to provide strategic services to these clients, there has been a notable reduction in demand for new project initiatives.
“It has also proven to be increasingly challenging to secure new enterprise clients in the market, where competition remains fierce.
“We were also unsuccessful in a re-tendered contract at an existing energy client, which was attributed to pricing, albeit we remain a strategic supplier to this client across several key initiatives.
“Despite the reduced revenue and profitability, the underlying business remains strong, with a growing sales pipeline and several new clients secured over the last quarter that have excellent potential for growth.
“In view of the challenging environment, there has been a phased reduction in operating costs to reposition the business for the current market.
“Notwithstanding the revenue impact, the company’s balance sheet and cash position remains strong.”
Company’s acquisitions
Mr Martin notes Waracle had made a number of investments in research and development, as well as the acquisition of Glasgow-company Screenmedia.
He continued: “In June Waracle successfully completed the acquisition of Screenmedia, a well established Glasgow-based design and software engineering agency.
“The acquisition will integrate our team – with its expertise in mobile app, digital product development and Artificial Intelligence (Al) – with Screenmedia’s award-winning team, taking Waracle to 200+ employees.
“This is a strategic acquisition that enhances our digital capabilities, extends our customer base and delivers an associated increase in revenue and profitability.
“We believe that this acquisition significantly improves Waracle’s positioning in the market and will deliver significant benefits in the short to medium term.
“Despite the reduced demand, analysts predict that the global market for digital transformation and related technologies will see sustained growth through 2030.
“While the previous 12 months have not met expectations, we believe that the growth outlook for Waracle remains positive and are confident that we have the right strategy to achieve our long-term objectives.
“The board wishes to thank everyone involved in Waracle for their dedication, professionalism and uncompromising delivery focus during the last year and we look forward to working with our Screenmedia colleagues in an enlarged Waracle business through 2024.”
David Romilly steps-down
Meanwhile, David Romilly will remain a shareholder at Waracle, and said the company was in “great shape” with David Tuck at the helm.
He added: “After an incredible 15 years at Waracle I’ve decided to step back from the business day-to-day.
“Fifteen years is a long time with any firm, If I was playing for Dundee United I’d be due my testimonial.
“The desire for new experiences has grown and I can’t shake that feeling to build something new.
“Waracle has been fun, enlightening and hard work — there really is no experience like it and I look back with incredible fondness at the 200+ person company I’ve helped build and the relationships I’ve made.
“With David Tuck at the helm, the company is in great shape, and I’ve no doubt the next chapter of Waracle’s journey will be bigger and better for Waracle staff and customers alike.
“I’ve had the pleasure of working closely with David and have been blown away with his leadership, experience and ambition for the company. I know Waracle is in very good hands.”
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