StatPro building a solid pipeline of business for new Revolution product

StatPro Group (LON:SOG) said it had increased investment in its newly launched cloud based product StatPro Revolution while remaining profitable and cash generative.

In an update on trading, the group, which sells portfolio analysis and asset pricing software to fund managers, said it had landed 11 new contracts for its existing StatPro Seven Product as well as securing 27 additions to original contracts.

All eyes, however, are on the progress of Revolution, which went live three months ago. 

Chief executive Justin Wheatley said the signs are encouraging, with the company building what it described as a solid pipeline of business.

Early indications suggest Revolution’s sales cycle is shorter than that of StatPro Seven.

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 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.

"The first three months of marketing Revolution has been a very exciting time for StatPro, providing the group with access to a far larger market opportunity,” Wheatley said this morning. 

“Our focus is on executing our strategy and building up the client base. 

“We have made good progress winning initial clients and getting useful and positive feedback. We are looking forward to the second half of 2011."

StatPro revealed that its net debt narrowed by £1.1 million to £5.3 million in the six months to June 30.