Fidessa rises on positive first half
04 August 2008 | 3759 views | 0
London-based Fidessa has posted rising revenue and pre tax profit for the first six months of the year and says it expects the growth to continue in the second half, despite the turbulent conditions in the financial markets.
Shares in Fidessa rose over seven per cent to 950 pence after the vendor posted a glowing set of interim results, with pre-tax profit soaring 162% to £21.5 million in the six months to 30th June 2008, from £8.2 million a year earlier. Group revenue increased 40% to £85.0 million in the first half, from £60.7 million a year ago.
Fidessa says growth continued to be driven by recurring revenue, which increased to £65.5 million in H1 and represented 77% of total revenue.
The firm says it has continued to develop its buy-side business during the first half, with over 30 new customers signing to take Fidessa LatentZero products. The vendor says recent market conditions have caused the sales pipeline to slow briefly, but this picked up again as "asset managers assessed the market conditions, and looked beyond equities in search of portfolio returns".
Fidessa says the challenging marketing conditions experienced by its sell-side clients created new opportunities for the group as customers moved consolidate more trading onto the Fidessa platform in order to cut costs.
Following the positive first half, Fidessa chief executive, Chris Aspinwall, says the group's business model, which has limited dependency on trader headcount, has delivered growth despite increased M&A among sell-side clients and moves by its customers to reduced staff.
Looking ahead Aspinwall says he expects demand for services and the sales pipeline to remain strong in the second half of the year.
"We are clearly aware that many of our customers are facing challenging market conditions at the moment and we are conscious of our role in being a supportive partner to our customers during this period," he says. "However, we currently see no indication that overall demand for our services will slow down and the sales pipeline remains strong. We therefore expect that like-for-like growth for the year as a whole will be around the level we have seen in the first half."
But despite the healthy H1 results and the upbeat outlook, analysts appear to be more cautious on Fidessa's prospects. Roger Phillips, an analyst at Evolution Securities, told Reuters reporters that in the "rear view mirror" the UK software market looks good, but warns that "looking further ahead is a lot worse".