Recurring revenue run-rate jumps by 26%

StatPro Group 19 July 2016 Update

StatPro Group

Recurring revenue run-rate jumps by 26%

Half-year trading update

Software & comp services

19 July 2016

Price

91p

Market cap

£59m

Net debt (£m) at 30 June 2016

c 9.1

Shares in issue

64.7m

Free float

55%

Code

SOG

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

6.4

23.0

13.8

Rel (local)

(2.8)

17.9

15.9

52-week high/low

91p

69.2p

Business description

StatPro Group provides cloud-based portfolio analytics solutions to the global investment community.

Next events

Interim results

3 August

Revolution Performance launch

28 September

Analysts

Richard Jeans

+44 (0)20 3077 5700

Dan Ridsdale

+44 (0)20 3077 5729

StatPro Group is a research client of Edison Investment Research Limited

Annualised recurring revenue (ARR) jumped by 26% in the year to 30 June, or 13% on a constant currency basis, to £36.2m. This incorporates Investor Analytics, which was acquired in January. Recurring revenue from cloud services now represents 38% of the total, up from 34% (on a proforma basis) in December. With the group’s transaction-based performance solution, Revolution Performance, due to be commercially launched in two months, StatPro is moving into its final stage of cloud transition, after eight years of planning and development. Hence, with StatPro’s US-based financial software peers and SaaS companies trading on lofty multiples, we continue to believe there is significant upside in the shares.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/14

32.0

2.6

2.7

2.9

33.9

3.2

12/15

30.2

2.6

2.6

2.9

34.7

3.2

12/16e

34.4

2.5

2.7

2.9

34.0

3.2

12/17e

36.4

3.4

3.6

2.9

25.1

3.2

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Trading update: StatPro Revolution ARR jumps 112%

H1 was very busy for StatPro, with two acquisitions (including US-based Investor Analytics for up to $16m) and two major contract wins. The group’s Paris office was downsized as part of the streamlining of finance and administration operations. StatPro Revolution, the cloud-based portfolio analysis service, experienced a 112% jump in ARR, or 90% at constant currencies, to £13.7m (which includes the Investor Analytics cloud solution). Total contracted sales of StatPro Revolution in H1 were £6.4m, boosted by deals with major financial institutions in Australia and the US.

Forecasts: Tweaked for exceptional items

The only change we have made to our forecasts is in increasing FY16 exceptional costs from £0.7m to £1.5m, in line with the update. Hence, our year-end net debt forecast rises from £7.2m to £8.0m. The original guidance for exceptional costs associated with the acquisition of Investor Analytics, announced in January, was £0.7-1.0m. These costs have moved up as GBP weakened and the French office restructuring increased the total charge to c £1.5m. We see increasing potential for upgrades as the year progresses, partly due to the GBP's fall, as revenues are mainly in US dollars and euros. The IA acquisition was funded with US$ debt, creating a natural hedge, but the group also hedges some future earnings, which limits the potential for FY16 upgrades, while FY17 and beyond have greater upside.

Valuation: Highly scalable cloud computing upside

StatPro’s stock trades on c 34x our maintained FY16e EPS, which falls to c 25x in FY17e. Alternatively, the shares trade on c 1.9x FY17e EV/sales, one-third of the level of StatPro’s larger US peers, which typically trade above 5x EV/sales, while US-based pure SaaS companies typically trade in the region of 4.1-6.5x EV/sales.

Exhibit 1: Financial summary

£'000s

2012

2013

2014

2015

2016e

2017e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

32,001

32,486

32,018

30,187

34,413

36,408

Cost of Sales

0

0

0

0

0

0

Gross Profit

32,001

32,486

32,018

30,187

34,413

36,408

EBITDA

 

 

6,728

5,463

4,359

4,044

4,339

5,202

Adjusted Operating Profit

 

 

5,534

4,327

2,875

2,852

2,924

3,721

Amortisation of acquired intangibles

(440)

(402)

(188)

(32)

0

0

Exceptionals

(693)

(347)

0

0

(1,500)

0

Share based payments

159

(192)

(26)

(121)

(200)

(213)

Operating Profit

4,560

3,386

2,661

2,699

1,224

3,509

Net Interest

(493)

(273)

(291)

(290)

(385)

(345)

Profit Before Tax (norm)

 

 

5,041

4,054

2,584

2,562

2,539

3,376

Profit Before Tax (FRS 3)

 

 

4,067

3,113

2,370

2,409

839

3,163

Tax

(1,387)

(1,030)

(774)

(788)

(711)

(945)

Profit After Tax (norm)

3,654

3,024

1,810

1,774

1,828

2,431

Profit After Tax (FRS 3)

2,680

2,083

1,596

1,621

128

2,218

Average Number of Shares Outstanding (m)

62.2

67.5

67.5

67.6

66.2

65.1

EPS - normalised (p)

 

 

5.9

4.5

2.7

2.6

2.7

3.6

EPS - FRS 3 (p)

 

 

4.3

3.1

2.4

2.4

0.1

3.3

Dividend per share (p)

2.70

2.80

2.90

2.90

2.90

2.90

Gross Margin (%)

100.0

100.0

100.0

100.0

100.0

100.0

EBITDA Margin (%)

21.0

16.8

13.6

13.4

12.6

14.3

Operating Margin (before GW and except.) (%)

17.3

13.3

9.0

9.4

8.5

10.2

BALANCE SHEET

Fixed Assets

 

 

60,272

55,992

56,113

51,857

58,692

58,642

Intangible Assets

57,683

53,524

52,546

48,613

55,659

55,816

Tangible Assets

1,974

1,883

2,470

2,233

2,022

1,816

Other assets

615

585

1,097

1,011

1,011

1,011

Current Assets

 

 

10,675

10,312

10,441

10,665

2,582

2,745

Stocks

0

0

0

0

0

0

Debtors

6,962

6,167

7,722

8,462

9,647

10,206

Cash

3,681

4,014

2,692

2,203

(7,064)

(7,461)

Current Liabilities

 

 

(19,927)

(18,514)

(20,271)

(19,778)

(21,289)

(22,103)

Creditors

(19,913)

(18,502)

(20,259)

(19,660)

(21,171)

(21,985)

Short term borrowings

(14)

(12)

(12)

(118)

(118)

(118)

Long Term Liabilities

 

 

(1,400)

(882)

(598)

(1,227)

(3,325)

(1,926)

Long term borrowings

0

0

0

(801)

(801)

(801)

Other long term liabilities

(1,400)

(882)

(598)

(426)

(2,524)

(1,125)

Net Assets

 

 

49,620

46,908

45,685

41,517

36,660

37,358

CASH FLOW

Operating Cash Flow

 

 

9,233

9,403

7,705

6,548

6,701

9,187

Net Interest

(306)

(98)

(10)

(84)

(385)

(345)

Tax

(1,261)

(1,616)

(1,173)

(832)

(951)

(686)

Capex

(4,187)

(4,412)

(5,904)

(4,999)

(4,947)

(5,234)

Acquisitions/disposals

0

(990)

0

0

(5,625)

(1,399)

Equity financing

5,689

0

2

64

(2,100)

0

Dividends

(1,627)

(1,856)

(1,889)

(1,960)

(1,959)

(1,920)

Net Cash Flow

7,541

431

(1,269)

(1,263)

(9,266)

(396)

Opening net debt/(cash)

 

 

3,399

(3,667)

(4,002)

(2,680)

(1,283)

7,983

Other

(475)

(96)

(53)

(134)

0

()

Closing net debt/(cash)

 

 

(3,667)

(4,002)

(2,680)

(1,283)

7,983

8,380

Source: Company accounts, Edison Investment Research estimates


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Germany

London +44 (0)20 3077 5700

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United Kingdom

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US

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New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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