It was a mixed bag at derivatives software house Ffastfill for H1 (to September 30 2011) as growth plans wrestled with profitability and lost.
H1 revenue was essentially flat at £7.3m and the company reported a loss before tax of £107k (although it significantly narrowed the gap compared to this time last year). However, SaaS revenue up was by 11% to £6.1m and now represents 84% of total revenue. This is an important metric because it demonstrates the acceptance of the model in the derivatives market and that Ffastfill has moved its business over to SaaS (see Ffastfill continues to benefit from SaaS).
With this major business change behind it, all it needs now it to generate profits and for that it is working on growing the business through acquisition (see Ffastfill expands its footprint with Spread Intelligence), by extending into consultancy and continuing to look to international markets. The latest move is the proposed (primarily) shares-based purchase of Chicago-based consulting and software business WTD Consulting for a maximum consideration of $12m (£7.6m). $7m (£4.5m) will be paid up front with the remainder deferred pending performance against targets.
On a pro forma basis, WTD generated revenue of $8m and operating profit of $1m for the year to June 30 2011, with a 50/50 split between software and development revenue and consultancy services around business analysis and implementation. WTD is expected to be earnings enhancing in the first twelve months.
The purchase is a good move for Ffastfill, as it will expand its US presence (regulatory changes are expected to drive demand for relevant software) adding 30 clients including a number of global banks, enhance its middle and back software portfolio, and grow its emerging consultancy business. WTD will also be an important vehicle for customising Ffastfill’s back office Eclipse product so it can be introduced to the US market.
The company is gradually building much needed scale, and like several other small UK HQ’d companies is seizing opportunities outside the UK for much of its future growth.