StatPro Group
Written by
StatPro Group |
Cloud services rises to 39% of revenue book |
Q3 trading update |
Software & comp services |
19 October 2016 |
Share price performance
Business description
Next events
Analysts
StatPro Group is a research client of Edison Investment Research Limited |
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In a brief trading update, StatPro says that its annualised recurring revenue (ARR) for StatPro Revolution, the cloud-based portfolio analysis service, grew by 81% on a constant currency basis to £14.7m over 12 months. This includes Investor Analytics, which was acquired in January 2016. StatPro launched its Revolution Performance module in September and one of its beta clients, National Australia Bank, has already gone live with eight of its clients on the platform. We are maintaining our forecasts, but given the recent contract momentum and weak sterling, we continue to see upside risk to our forecasts. 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 |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/14 |
32.0 |
2.6 |
2.7 |
2.9 |
41.4 |
2.6 |
12/15 |
30.2 |
2.6 |
2.6 |
2.9 |
42.3 |
2.6 |
12/16e |
35.5 |
2.8 |
2.7 |
2.9 |
41.3 |
2.6 |
12/17e |
37.6 |
3.7 |
3.7 |
2.9 |
30.4 |
2.6 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Q3 trading update
In the 12 months to 30 September 2016, the ARR for StatPro Revolution grew by 81% to £14.7m (September 2015: £8.2m at constant currency). Additionally StatPro has benefited from the fall in sterling as c 85% of its revenues are from outside of the UK, while disproportionate costs are in sterling. We note than Investor Analytics generated c $5m revenues in CY15, of which c 96% was recurring, but StatPro does not break out the figures, as Investor Analytics has been fully integrated. StatPro Revolution as a percentage of group ARR increased to 39%, up from 38% in 30 June and 25% on a constant currency basis as at 30 September 2015.
Revolution Performance launched in September
In September, StatPro launched its new cloud-based performance measurement and data management solution, Revolution Performance. This transaction-based system runs off Amazon cloud and represents the transition of the core component of StatPro’s traditional software platform to the cloud. It enables customers to draw on immense computing power to process data over the cloud, which is a substantial competitive advantage over traditional mainframe systems that rely on fixed processing power. Earlier this year the group announced two new significant contract wins that both included Revolution Performance – one is worth at least £1.2m over five years, with a global American financial institution and the other is a £2.3m three-year contract win with a major Australian financial institution.
Valuation: Highly scalable cloud computing upside
StatPro’s stock trades on c 41x our maintained FY16e EPS, which falls to c 30x in FY17e. Alternatively, the shares trade on c 2.1x FY17e EV/sales, one-third of the level of StatPro’s larger US peers, which mostly trade above 5x EV/sales, while US-based pure SaaS companies typically trade in the region of 4.3-7.0x 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 |
35,496 |
37,645 |
Cost of Sales |
0 |
0 |
0 |
0 |
0 |
0 |
||
Gross Profit |
32,001 |
32,486 |
32,018 |
30,187 |
35,496 |
37,645 |
||
EBITDA |
|
|
6,728 |
5,463 |
4,359 |
4,044 |
4,715 |
5,679 |
Adjusted Operating Profit |
|
|
5,534 |
4,327 |
2,875 |
2,852 |
3,299 |
4,150 |
Amortisation of acquired intangibles |
(440) |
(402) |
(188) |
(32) |
(1,100) |
(1,100) |
||
Exceptionals |
(693) |
(347) |
0 |
0 |
(894) |
0 |
||
Share based payments |
159 |
(192) |
(26) |
(121) |
(200) |
(213) |
||
Operating Profit |
4,560 |
3,386 |
2,661 |
2,699 |
1,106 |
2,838 |
||
Net Interest |
(493) |
(273) |
(291) |
(290) |
(535) |
(470) |
||
Profit Before Tax (norm) |
|
|
5,041 |
4,054 |
2,584 |
2,562 |
2,765 |
3,680 |
Profit Before Tax (FRS 3) |
|
|
4,067 |
3,113 |
2,370 |
2,409 |
571 |
2,368 |
Tax |
(1,387) |
(1,030) |
(774) |
(788) |
(774) |
(1,030) |
||
Profit After Tax (norm) |
3,654 |
3,024 |
1,810 |
1,774 |
1,991 |
2,650 |
||
Profit After Tax (FRS 3) |
2,680 |
2,083 |
1,596 |
1,621 |
(203) |
1,337 |
||
Minority interests |
0 |
0 |
0 |
0 |
(213) |
(271) |
||
Net income (norm) |
3,654 |
3,024 |
1,810 |
1,774 |
1,778 |
2,379 |
||
Net income (statutory) |
2,680 |
2,083 |
1,596 |
1,621 |
(416) |
1,066 |
||
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 |
3.7 |
EPS - FRS 3 (p) |
|
|
4.3 |
3.1 |
2.4 |
2.4 |
(0.6) |
1.6 |
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 |
13.3 |
15.1 |
||
Operating Margin (before GW & except.) (%) |
17.3 |
13.3 |
9.0 |
9.4 |
9.3 |
11.0 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
60,272 |
55,992 |
56,113 |
51,857 |
58,054 |
56,995 |
Intangible Assets |
57,683 |
53,524 |
52,546 |
48,613 |
54,876 |
54,029 |
||
Tangible Assets |
1,974 |
1,883 |
2,470 |
2,233 |
2,167 |
1,955 |
||
Other assets |
615 |
585 |
1,097 |
1,011 |
1,011 |
1,011 |
||
Current Assets |
|
|
10,675 |
10,312 |
10,441 |
10,665 |
2,223 |
2,588 |
Stocks |
0 |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
6,962 |
6,167 |
7,722 |
8,462 |
9,950 |
10,553 |
||
Cash |
3,681 |
4,014 |
2,692 |
2,203 |
(7,727) |
(7,965) |
||
Current Liabilities |
|
|
(19,927) |
(18,514) |
(20,271) |
(19,778) |
(21,638) |
(22,507) |
Creditors |
(19,913) |
(18,502) |
(20,259) |
(19,660) |
(21,520) |
(22,389) |
||
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 |
35,313 |
35,149 |
CASH FLOW |
||||||||
Operating Cash Flow |
|
|
9,233 |
9,403 |
7,705 |
6,548 |
7,489 |
9,709 |
Net Interest |
(306) |
(98) |
(10) |
(84) |
(535) |
(470) |
||
Tax |
(1,261) |
(1,616) |
(1,173) |
(832) |
(1,600) |
(747) |
||
Capex |
(4,187) |
(4,412) |
(5,904) |
(4,999) |
(5,209) |
(5,411) |
||
Acquisitions/disposals |
0 |
(990) |
0 |
0 |
(5,536) |
(1,399) |
||
Equity financing |
5,689 |
0 |
2 |
64 |
(2,079) |
0 |
||
Dividends |
(1,627) |
(1,856) |
(1,889) |
(1,960) |
(1,959) |
(1,920) |
||
Net Cash Flow |
7,541 |
431 |
(1,269) |
(1,263) |
(9,429) |
(238) |
||
Opening net debt/(cash) |
|
|
3,399 |
(3,667) |
(4,002) |
(2,680) |
(1,283) |
8,646 |
Other |
(475) |
(96) |
(53) |
(134) |
(500) |
() |
||
Closing net debt/(cash) |
|
|
(3,667) |
(4,002) |
(2,680) |
(1,283) |
8,646 |
8,884 |
Source: StatPro Group accounts, Edison Investment Research estimates
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