Misys bolstered by banking

Misys bolstered by banking

Shares in UK banking-to-healthcare vendor Misys jumped in morning trading after the group reported a better-than-expected rise in first quarter revenue, driven by strong sales at its banking division.

Misys stock rose 18.25 pence - or 8.80% - to 225.75 pence in morning trading after the vendor reported a six per cent rise in Q1 group revenue to £104 million.

The revenue rise was "driven principally by a strong performance from banking", says Misys.

Total Q1 revenues at the banking division came in at £31 million, up 19% on the comparable period last year. Misys says revenue from initial licence fees (ILF) increased to £5 million from £2 million and is ahead of internal budgets for the first quarter. Professional services revenues at the division grew 21% to £8 million, while maintenance revenues rose three per cent to £18 million.

Total Q1 revenues at the vendor's treasury and capital markets unit rose six per cent to £27 million compared to last year, despite ILF revenue falling by 16% to £6 million. Misys says this decrease is due in part to "a particularly strong comparator period".

Transaction processing revenues were flat at £3 million. But professional services revenues at unit soared by 58% to £5 million while maintenance revenues rose by five per cent to £13 million.

However performance at the vendor's healthcare division remains shaky, with total Q1 revenue down two per cent to £46 million.

Misys says the results show that its turnaround is making progress. Group chief executive Mike Lawrie says the firm is on track with cost take out and margin improvement work.

"Despite the significant seasonality traditional in our business, banking delivered strong ILF growth driven by a number of valuable contracts and treasury and capital markets performed ahead of the budget we set," he says in a statement. "We are pleased with our performance but there is a lot of work to do. We continue to focus on executing our strategy and this is one data point which demonstrates that we are making progress."

Lawrie is pushing through a corporate turnaround programme at the company, which has involved a clear out of top executives and the sell off of a number of Misys assets. He is also pursuing partnerships with other software providers to fill product gaps - rather than making acquisitions - such as the banking software deal with Germany's software vendor SAP, which was announced yesterday.

Lawrie says the deal with SAP "will drive value for new and existing customers over the long term".

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