Global presence helping us to grow
IAR Systems’ first year as an independent listed company was characterized by a high level of activity, growth and profitability. We enhanced our offering and consolidated our position as the world’s leading independent provider of software for programming of embedded systems.
2011 was, as planned, a highly eventful year! Summing up an eventful year is always a pleasant task, especially if it is the result of events that we ourselves planned and worked hard to achieve.
A new business model
We started the year by completing the restructuring we saw as necessary to create the focus demanded by our potential – a potential that has become even more tangible over time. When IAR Systems became part of Intoi in 2005, it was with an explicit ambition to shift from project-driven operations to a software-based business concept and model. In reality, there was no major change in the offering, since the project-driven business that had been in place for more than 20 years had resulted in a world-leading software product.
The market was the same, the organization was the same and the only change was related to the customers. Although there were many customers who based their product development on our software, we were not focused on them. A comparison that clearly reflects the change of business model is that project-driven revenue decreased from 18% in 2006 to 7% in 2011 and license sales accounted for 82% of our total revenue in 2011.Today we have an unwavering focus on the customers who use our software to program embedded systems in their products.
An embedded system often functions as the brain of the customer’s product, and we are naturally delighted that more and more customers are choosing to approach IAR Systems and commit to a long-term relationship with us. We have supplemented our offering to better suit our major customers, which meant that we signed three times as many customer agreements as in 2010.
A focus on the customers
One distinct trend that we saw during the year is that the customers have a need for stability, security and flexibility in their development environment. We identified this need at an early stage and launched a concept, a message and an offering that we called ”Standardization without limitations”. This has not only attracted widespread attention in the media and the industry but has also been a key driver behind our largest customer agreements.
As we sum up the past year with our customers, 2011 was unique in several ways. Never before have so many customers made recurring investments in our products. This year, more than 90% of our customers were recurring in our sales statistics. And never before have so many potential customers visited our website or read our monthly newsletter. In the past year the number of unique visitors to the website grew from 65,000 per month to over 90,000 per month at the end of the year, and subscribers to our monthly newsletter increased from 94,000 to 132,000 at the end of the year. We captured this rising interest during the year by relaunching our website www.iar.com.
Whether focusing on our customers, adapting our offering or updating our most important communication channel, the aim has been to invest in and highlight our potential. It is truly satisfying that this resulted in sales growth well in excess of our financial target.
Enhancement and acquisitions
Our ambitions are high and have always been so, above all when it comes to our products. This year we launched many new functions and versions of our products and further enhanced some of our most important functions, primarily in our topselling products. We have also invested offensively through our acquisition of Signum. Our strategy is to have a product portfolio that stands on its own merits and in-house capacity for further development and support.
One area where we have noted rising demand is recent years is support for the more advanced embedded systems, and this is something we have delivered in our software. The most advanced systems also place more stringent demands on hardware support in the development environment, and this is where Signum fits into the picture. Signum not only gives us a product but also in-depth expertise in areas where there is an urgent need today, at the same time that it provides us with scope to further supplement our offering.
Growth in all markets
Not until the year is at end can we sum up our financial performance. The global economy has been a challenge for us, as for many others. But despite this, it is fantastic to look back on a year of growth in all markets, record earnings in several quarters and a stable balance sheet. It is both inspiring and educational to lead our sales offices around the world, all of which in different ways represent us and showcase our offering in their own markets. Our global presence is something that will benefit us and our customers both today and in the future, in pace with our growth.
Our ambitions for 2012
In conclusion, 2011 is a year to remember by virtue of the values we created through higher sales, improved earnings, an expanded product offering, growth in the number of employees and larger and more loyal customers than ever before. In 2011 we found a way to capitalize on our long history of independence, our expertise, our products and our global presence. In 2012 we will continue on our chosen path to create an even more memorable year for our shareholders, customers and employees.
Uppsala, March 6, 2012
Stefan Skarin, CEO, IAR Systems
