Despite expressing cautious optimism for the future, SunGard chief Cristóbal Conde says it is still too early to call the bottom of the market as Q1 figures show the financial systems powerhouse continues to grapple with long sales cycles, high pricing pressure and a rapidly changing regulatory dynamic.
Across the group, revenue for the quarter ended 31 March, 2010 was $1.25 billion, down six percent from 2009, with adjusted Ebitda nine percent off at $297 million.
The overall figures were severely impacted by a 69% decline in revenue from the volatile broker/dealer business "due primarily to the industry-wide dynamic by which active trading firms are opting to become broker/dealers and trade on their own behalf".
Excluding these results, revenue was up three percent and adjusted income from operations was down three per cent.
In financial services, revenue decreased 11% to $659 million for the quarter. Organic revenue decreased 13% for the quarter. Excluding the broker/dealer business, organic revenue was up four per cent. License fees were $40 million for the quarter, an increase of $20 million compared to the same quarter in 2009.
Cristóbal Conde, president and chief executive officer, says the prerformance reflects the lag effect in the firm's recurring revenue business model.
"Prevailing trends continue with long sales cycles and high pricing pressure," he says. "Our results also reflect the changing dynamics and regulatory environment in the financial industry which are behind the one-time drop in revenue from our trading systems business."
On the upside, software and processing businesses are showing signs of renewed growth says Conde.
"While it is too early to call the bottom of the market, we are cautiously optimistic," he says. "The IT spending mood shows signs of an uptick, our sales pipelines reflect a higher quality of deals and our competitive position continues to be very strong."