UK dealing room systems house royalblue is to change its name to Fidessa in an effort to capitalise on the penetration of its core trading system and build a global brand. The company, which reported strong profits for 2006, is also looking for a large acquisition to expand its business with the buy-side and cater for new financial instruments.
For the year ended December 2006, royalblue turned in a solid trading performance with revenue up by 27% to £94.6 million, operating profit up 29% to £12.4 million and recurring revenue up by 38%, now representing 72% of overall revenue. Operating in a highly cash generative business, the firm has also built up a substantial warchest, ending the year with a closing cash balance of £40.1 million, up from £26.1 million last year.
In its results statement, the company says: "Royalblue is seeing an unusually large number of companies in its sector that are potentially for sale. As a result we believe it is prudent to maintain the strong cash balance for the time being to support any acquisition opportunity that becomes available."
Speaking to analysts, CEO Chris Aspinwall, says the firm is looking for companies focused on other financial instruments and with software that could improve existing buy-side functionality.
On the proposed name change, Aspinwall says the Fidessa brand has better recognition in the markets than royalblue. The switch, he says "will enable us to provide a consistent image across all our activities allowing us to deliver a single, high value, global brand".
During 2006, the company grew its user base by more than 50%, adding 120 new customers. Across the world the total number of active Fidessa screens has now increased to over 10,000, says the firm, up by around 25% during the year. The company also made the first sales of its new multi-asset platform incorporating derivatives functionality and won its first order for the recently-introduced Fidessa BlueBox algorithmic trading application.
Clouds on the horizon include the strength of sterling, which may hit royalblue's results next year - 40% of the firm's business is now generated in the US markets.
The company must also contend with an outstanding patent dispute with Lava Trading, which has so far soaked up £1.5 million in costs. The US Court of Appeals recently ruled that an earlier hearing in royalblue's favour had misinterpeted the technical terms of the dispute and has sent the case back to the lower courts.