StatPro Group PLC (LON:SOG) has bagged two contracts worth around £1mln each in the final 3 months of 2018 as the firm’s annualised recurring revenues crept upwards over the year.
The first of these was with an existing customer, a large South African financial institution, for roughly £1mln to provide StatPro’s Infovest service, in which the firm purchased a 72.7% stake in 2016.
Infovest specialises in data warehousing and reporting software for the asset management industry, a sector in which StatPro also operates.
The second win for the firm came in December in the form of a £1.12mln contract with a large European insurance group for its Revolution Delta service.
Delta, which StatPro acquired from UBS in May 2017, is a risk and performance analytics service that StatPro said provided it with “scale” and significantly enhanced its product capabilities.
The group is also integrating Delta into its Revolution platform to ensure “seamless integration with no disruption to the existing service”.
Justin Wheatley, chief executive of StatPro, said that the integration would avoid disruption for the firm’s Delta clients while also allowing them to “benefit from the enhanced and broader functional capacity of Revolution".
With Delta as part of the family, StatPro's analytics service can now branch out from the middle office to the front office of asset managers.
Rising ARR in 2018
StatPro is also seeing results from its new products, reporting in a third quarter trading update that annualised recurring revenue (ARR) had risen 3% to £54.8mln in the 12 months to the end of September 2018 compared to the year ago period.
The ARR includes the contribution from ODDO BHF, which was acquired at the beginning of July. The transition of the managed risk service of ODDO BHF to the company’s flagship Revolution platform is expected to have completed by the end of 2018. Once migrated, the duplicate cost of third-party software and data costs will be removed providing the additional contribution to adjusted underlying earnings (EBITDA).
Underlying ARR growth for the group’s StatPro Revolution product (excluding the impact of acquired revenue and including conversions from StatPro Seven) was 16%.
Offering “well placed” to benefit from outsourcing, says analyst
In a note at the end of November, analysts at research house Edison said StatPro’s “broadened managed service offering” left it “well placed to benefit from outsourcing trends in the asset management industry”.
“In our view, the shares look increasingly attractive, given the group’s £55mln recurring revenue book and the much reduced rating (c 15x FY19e), especially in light of the active M&A backdrop in financial software”.
Edison is forecasting revenues of £56.8mln for the full year 2018 compared to £49.3mln in 2017, while pre-tax profits are forecast to rise to £5mln from £3.3mln.
The firm also maintains a 117.5p target price on the stock.
Earnings per share (EPS), meanwhile, is expected to increase to 7p per share from 5.8p in 2017.
As of 2 January 2019, StatPro shares are trading around 111.5p with a market cap of £73.3mln.