Data management firm Cirata has successfully raised $7.2 million to support its ongoing turnaround strategy. Despite delays in deals, the company’s 2024 performance remains on course.
Strategic steps toward restructuring and cost optimisation are key elements that Cirata is implementing to overcome current challenges, positioning itself for sustainable growth.
Successful Fundraising Initiative
Data management company Cirata successfully completed a fundraising round, amassing $7.2 million (£5.2 million) through a share offer. This strategic move is seen as a vital step in supporting the company’s ambitious turnaround plans. Participating key executives, including CEO Stephen Kelly and non-executive chair Ken Lever, contributed approximately $50,000 (£39,000) collectively. This financial injection is poised to drive Cirata towards achieving cash flow breakeven as 2024 unfolds.
Operational Restructuring and Cost Management
Cirata has embarked on an extensive restructuring initiative, targeting efficiency and cost savings. The company managed to significantly reduce annualised costs from $45 million to $23 million, with plans to further cut another $3 million this year. This root-and-branch approach is integral to shaping a leaner operational model and ensuring financial stability, a focus underscored by the current management team.
Despite delays in some deals, the firm maintains a hopeful outlook, expecting to meet its robust booking targets of $13 million to $15 million this year. It is anticipated that the latter half of the year will contribute significantly to these figures through increased contract wins.
Financial Performance Amid Investigation
During the recent Q2 trading update, Cirata reported a remarkable 143% year-on-year increase in bookings, totalling $1.7 million. However, this promising financial news is tinged with caution due to an ongoing FCA investigation. The company is scrutinised over possible fraudulent activities that previously resulted in a significant £12 million revenue loss.
Continuity and recovery efforts at Cirata might face setbacks depending on the FCA’s findings and potential imposition of fines, possibly impacting future results and reputation.
CEO’s Optimistic Perspective
CEO Stephen Kelly remains optimistic about Cirata’s progress despite headline numbers not fully reflecting operational advancements. Kelly highlighted enhanced sales conversions as a positive sign of the company’s trajectory towards recovery.
Kelly also mentioned a new cost alignment strategy, aiming to reduce the annualised costs further to around $20 million by the end of December 2024. This would represent a significant decline from the $45 million base at the end of March FY23.
Future Contracts and Market Positioning
Looking ahead, Cirata foresees the potential for major contracts in Q4 FY24, which could substantially boost its performance, aligning with the company’s strategic growth aspirations. According to Kelly, the firm’s growth is expected to be non-linear, with sales cycles lasting between six to twelve months.
The firm’s pipeline rebuild reflects management’s efforts since their inception, aiming for sustainable bookings growth despite initial setbacks and delays.
Cirata’s strategic focus on cost-effectiveness, improved go-to-market productivity, and market alignment positions the company to regain its footing effectively by year-end.
Acknowledge Existing Challenges
While ongoing challenges such as the FCA investigation and past revenue losses loom over Cirata, its current initiatives underscore a resilient attempt to stabilise and thrive. Cirata continues to communicate transparently with investors and stakeholders about hurdles and forward-looking strategies.
CEO Stephen Kelly extends gratitude towards employees, customers, and investors for their unwavering dedication and support during this pivotal time.
Future Prospects
Cirata’s strategic initiatives around financial restructuring and market realignment are crucial for securing a stronger competitive position. As the firm navigates the complexities of its financial landscape, the anticipated Q4 contracts offer promise for a robust end to FY24.
In conclusion, while Cirata faces challenges including an ongoing FCA investigation, its recent fundraising success and strategic restructuring efforts lay a promising foundation for future growth. The firm’s ability to align its costs with market demands while anticipating significant contract gains shows resilience and adaptation in a dynamic business environment.
