- Instem wins largest ever contract worth $12 million
- Demonstrates adoption of cloud-based services
- Increases margins and visibility of revenues
IT solutions provider to the life sciences industry Instem (INS:AIM) announced its largest ever contract win on Friday worth a minimum of $12 over the next five years, helping the shares gain 7.2% to 670p.
The client is a global CRO (contract research organization) and has been a clinical trial analysis customer since 2016. It is an early adopter of Instem’s Aspire software solution which has been developed over the last 18 months.
Aspire provides cloud solutions and back-end services. The company said it is a ‘significant advancement in the Client's digital transformation, providing cloud-native capabilities that will enable scalability, elasticity, and resiliency’.
The contract is composed of $3 million implementation fees with the bulk paid in 2023 and the remainder paid via annual subscription fees of $2.25 million.
HIGH MARGIN AND VISIBILITY
Aspire’s SaaS (software-as-a-service) model will provide increased visibility and higher margin returns for the company compared with existing custom SCE (statistical computing environment) implementations.
Instem said annual recurring revenues from the client are expected to be around $1 million higher than currently received.
Additional Amazon (AMZN:NASDAQ) Web Service cloud fees will be charged to the client based on usage.
EXPERT VIEW
Healthcare analyst at Singers Chris Glasper said: ‘the contract win underscores the ongoing trend for pharma & CRO clients to adopt cloud-based SaaS solutions as the life sciences industry undergoes its own digital transformation’.
Glasper reckons it is the first of a potential number of leading Pharma and CRO’s which could take all or part of Aspire’s modular solution to replace their existing SCE’s over the coming years.
The analyst believes further deployment Instem’s SaaS solution will ‘significantly’ improve the quality of revenues as it moves away from consulting revenues and one-off project fees.
Glasper left his earnings forecasts unchanged saying the contract win ‘underpins’ existing expectations.
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