StatPro’s Revolution software substantially broadens potential market, says Edison

StatPro's (LON:SOG) new Revolution software substantially broadens the group’s potential market by targeting front offices and smaller players in the wealth management industry, according to analysts at research boutique Edison.

In a note to investors following today’s third quarter update, which reported that trading met expectations, analyst Richard Jeans explained that modular investment analysis software was historically sold to ‘middle offices’ of larger firms and it would have been installed on site.

However with the lower cost Revolution software – which is hosted on the ‘cloud’ - StatPro has lowered the traditional customer entry level for sophisticated investment analysis software and as a result it now has a much broader market.

Looking more closely at today’s update, Jeans said: “new business was satisfactory in what is typically the quietest quarter.” 

He added: “While the outlook clearly retains significant uncertainties, management remains cautiously optimistic and further investment in sales and marketing is expected in FY12 to drive the group’s new cloud-based technology services. 

“In our view the current depressed margins provide an opportunity for forward-thinking investors.” 

This morning StatPro noted that the global economic outlook had worsened since it last updated the market and that there had been an increase in demand for its risk-based products and services as a result.

However, it also pointed out that these market conditions make it more challenging to accurately forecast levels of new business and renewal rates, although the firm’s “high level of recurring revenue and prospects for new business” generated by its Revolution and Seven offerings gave it reason to be confident.

StatPro said that revenues in 2011 for its Revolution cloud-based portfolio analysis and research service would be modest, but that this service had added further clients and portfolios during Q3 2011. The firm added that there are “positive indications” that it shall make further progress in signing new clients in both Q4 2011 and 2012, which will be the service’s first full year since its launch.

StatPro said that new business for its StatPro Seven product in the third quarter “was satisfactory in what is typically the lowest quarter for signing new commitments”. The firm said it signed its first client for its new StatPro Seven Risk bureau service that was launched in Q3 2011. Renewal rates “remain high” and are projected to be around 90 per cent or better for the full year.

“Our increased marketing presence has enabled us to make progress with all our products,” said Justin Wheatley, StatPro’s chief executive. 

“Our clients can see how a combination of StatPro Seven and StatPro Revolution will enable them to communicate better with their clients at a time of high volatility and uncertainty in the markets. Regulation continues to drive needs and our cloud platform allows us to adapt even faster to client priorities.”