Statpro, which sells analytical software and data services that enables global asset management companies evaluate portfolios of financial instruments, has strongly grown both revenue and profit in the six months to 30th June 2007. Compared to a year ago, revenue rose by 79% to £11.3m, operating profit by 126% to £2.28m and net profit by 114% to £1.59m. Operating margin climbed to 20.2% from 12.4%. Cash generated by operations was up 48% to £2.89m.
Statpro also announced that it was to Canadian competitor Initram Data, for up to C$3m (£1.41m). Initram is a competitor to Statpro Canada (formerly FRI, acquired in September 2006). Statpro says that this will help it widen its range of data services as well as being 30 data customers that it can cross-sell products to.
"So far Statpro has pursued a very smart acquisitions strategy that has reaped considerable benefits. It has increased its range of offerings, extending into the data services that feed into the analytical software. It is combining the existing and acquired capabilities in new ways."
"It has not been afraid to dispose of those elements of the acquired companies that did not match its strategy; indeed it turned this to its advantage."
"It has also acquired a professional services business."
"Overall Statpro is doing well in combining the data services with its software and extending into software-as-a-service to supply smaller financial services companies with few internal IT resources. The bit that the company has to watch is the professional services piece - this seems to be only loosely connected to the other elements of the business and we think that has to change so that the professional services play a strong role in feeding the product business rather than vice-versa, because the product business has far higher margin potential."
Full commentary below
Comment:
"So far Statpro has pursued a very smart acquisitions strategy that has reaped considerable benefits, not least profitably growing its revenue by 59% from acquisitions on top of 20% organic growth. It has increased its range of offerings, extending into the data services that feed into the analytical software. It is combining the existing and acquired capabilities in new ways, for example moving into complex asset pricing as the financial market dream up ever more ingenious products, like derivatives and securitised debt."
"It has not been afraid to dispose of those elements of the acquired companies that did not match its strategy, for example disposing of FRI's real time data business. Indeed it turned this to its advantage by engaging with another real-time data provider (Tenfore Systems Ltd) to provide an alternative real time data feed (but with worldwide rather than just regional data) to its clients while paying Statpro up to £1.25m for the privilege. The next challenge (and opportunity) the company faces here is to really get the sales machine gearing up in North America."
"It has also acquired a professional services business. Specifically, when it bought FRI it took on a large project sub-contracted from Accenture to develop a back-office system for the Johannesburg Stock Exchange. Through negotiation with Accenture it has increased its revenue from this project by $1.8m because more development work was required than originally anticipated (perhaps by 'scope creep', though the company is silent on this issue). Statpro has now moved this development work to its South African subsidiary, and anticipates more work in this domain."
"Overall Statpro is doing well in combining the data services with its software and (though we haven't discussed this) extending into software-as-a-service to supply smaller financial services companies with few internal IT resources. The bit that the company has to watch is the professional services piece - this seems to be only loosely connected to the other elements of the business and we think that has to change so that the professional services play a strong role in feeding the product business rather than vice-versa, because the product business has far higher margin potential."
-Ends-
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