StatPro signs first distribution deal for new Revolution platform

StatPro (LON:SOG) revealed this morning it has signed its first distribution agreement for the Revolution product, its newly-launched portfolio analysis platform for asset managers.

It will be sold by Trasset International, which provides back office systems to the financial sector and which has 50 clients in asset management and private wealth.

The news was part of a wider update ahead of the company’s annual meeting today.

In it StatPro revealed it is trading in line with expectations, while the company’s debts had fallen to £3.3 million by the end of April from £5.5 million in December.

The group also said it is opening a Hong Kong office to support online sales in Asia.

However it is news on Revolution which has been eagerly anticipated by the market. 

Today’s deal with Trasset suggests the product is gaining traction after StatPro signed up Franco-Belgian bank Dexia as its first custodian client.  

Chairman Carl Bacon will tell today’s AGM: “It is clear from the feedback we have received over the last six months that StatPro Revolution has a strong appeal to asset managers of all types.

“The service is performing well, securing new business and opening up additional markets for the group. 

“We are a robust business operating in a growth market and the high levels of recurring revenue from our StatPro Seven business provides us with the confidence to continue to invest for the future. “Therefore, whilst there remains further investment to be made to exploit StatPro Revolution’s full potential, the Board is confident of a successful outcome for the year.”

Revolution is a low cost, high spec analytics package for fund managers, which has all the bells and whistles of a much more expensive piece of software.

It includes risk management functions, performance and attribution analysis as well as the capacity to publish bespoke reports for clients explaining how and why their portfolios performed the way they did. 

For StatPro it takes the company further down the software as a service (SaaS) route. It now derives 30 percent of its revenues from this source.

For the uninitiated, SaaS is part of the cloud computing phenomenon where programmes are delivered on demand via the internet, rather than sold as rentals and installed on customers’ premises.

As such products tend to be easy to use and support. Costs are lower, which has a knock-on effect on price. 

In the case of Revolution, StatPro is offering the service at a fee of US$100 per portfolio a month. 

This it hopes will open up a new and potentially lucrative tier of the market. Its current product StatPro Seven has been an incredible revenue generator. 

Revolution is tailor-made for the cost conscious smaller fund managers who dominate the spending in the sector.

There are around 25,000 firms managing US$1 billion or less but which collectively spend US$3 billion annually on analytics, and there’s another 3,000 that spend US$1 billion, according to a study by Watson Wyatt. 

The top 25 fund managers manage around US$27 trillion of investors’ cash, yet between them shell out a comparatively paltry US$300 million on software. 

So there is some real money to be made stepping out of the direct firing line of the big data providers such as Reuters, Bloomberg and Factset and aiming for the smaller clients.

Chief executive Justin Wheatley and his team are targeting the industry’s gatekeepers – custodians and wealth managers – as well as smaller asset managers and firms in emerging markets such as Asia and South America.

“(Revolution) is aptly named as it is completely different from traditional software products,” Wheatley said in a recent interview. 

“It’s software as a service. So to access it you come in via the web. It stays in one place so it is very easy to access anywhere in the world. 

“And the way it is priced is very competitive. So instead of having to buy a whole system for maybe tens or hundreds of thousands of dollars, you can have all the analytics we provide for US$100 per portfolio per month, which is incredibly cheap on a per portfolio basis. 

“It means even the smallest fund manager can have access to the most sophisticated portfolio analytics previously only available to the richest fund managers.”