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Bursting Blue Prism’s bubble: sales growth is not sustainable

Human shaking hands with a robot

Blue Prism is spending too much money on growing sales and not enough on improving products. In 2018 the company invested £65m in staff, travel and entertainment but just £4m in research and development – nowhere near enough to allow it to stand up to rising competition in the long run. With better financed rivals winning new customers at a far quicker pace, we don’t think the group’s pace of growth is sustainable.


The problem with being an early mover in the software market, is that products can quickly look outdated. That is an issue facing Blue Prism (LON: PRSM) which, having been one of the pioneers of the robotics process automation market, is quickly being caught up by newer peers, especially in the US. That might be one of the reasons why the company has announced the £80m acquisition of London-based artificial intelligence company Thoughtonomy. The company will pay £17m in cash the next 18 months and offer £63m in shares to the target company's current owners, including its founder. It is a good job the acquisition is structured this way because Blue Prism reported operating cash outflows of £18.6m in the first six months of the 2019 financial year to October, compared to £0.5m this time last year. 

For now, revenue growth continues to be impressive, but we wonder how long that will last as newer companies attack the market and consolidation steps up.…

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