Exchange spending cutbacks hit Patsystems

Exchange spending cutbacks hit Patsystems

UK screen-dealing software house Patsystems has issued a profits warning as sales to emerging exchanges are hit by economic and financial turmoil.

In an interim trading statement, Patsystems says it expects to deliver only "modest profits" for the full year after encountering a substantial downturn in one-off exchange license sales.

The firm says it has been engaged in discussions with four exchanges in Asia and two in North America, and that a "considerable portion" of the result for the full-year was dependent on closing two of these deals.

But negotiations have stalled as new exchanges experience difficulties in raising financing, and others reign in their spending in a climate of continued economic uncertainty.

Patsystems does not expect the situation to improve any time soon: "Although we do expect that we will be successful in delivering new exchange sales, the operating cost base will be reduced so that, in future years, the dependency on profit from exchange sales will be materially reduced."

A deterioration in trading systems sales in Europe and North America has also been felt, pushing 2011 revenues below last year's high water mark.

Patsystems says the pipeline in expectd to improve in 2012 as it continues to invest in its XConnect hosted offering in an effort to broaden its appeal through the provision of connectivity to Chinese futures markets, unfiltered tick data provision, multi-broker support and a FIX Gateway. Revenues from XConnect are forecast to double in 2012 to £3 million with both new and existing customers joining the service.

By mid-morning, shares in the vendor had plummeted by 35% to 15.5 pence, after hitting an earlier year low of 12.75 as the markets reacted swiftly to the news.

Comments: (0)