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Challenging conditions in global financial markets impacted Fidessa during 2011 with the result that it saw revenue growth of 6% versus the 10% of the previous year. There was growth in all regions, although as would be expected growth in Europe was muted and was significantly outpaced by Asia and the Americas.
Revenue for the year ending December 31 2011 was £278m (up 6% as reported or 7% at constant currencies) and while that is still solid, the growth rate has been declining over the last few years e.g. 26% in 2009, 10% in 2010 (see here and here). Pre tax profit was up 7% to £4.3m. Difficult market conditions, consolidation and closures within the customer base (including MF Global which represented 1.3% of Fidessa’s revenue), regulatory delay, and lower trading volumes have all had a part of play. Fidessa has fared better than Patsystems though, particularly where the effect of the MF Global collapse is concerned (see here)
The move into the derivatives market from its cash equities base should help and it has secured a global deal with Citi, which chief executive Chris Aspinwall says helps endorse Fidessa in this market. The derivatives business (including software and infrastructure) is still at an early stage of development though. The company is putting sizable resources into it: 20% of its R&D staff are working on derivatives developments, and it will spend c£2m on infrastructure during 2010 (including data centres in Mumbai and Chicago and the communication network), finance director Andy Malpass told us.
Fidessa is also looking outside Europe for growth and the balance of the business continues to tip – 2011 saw 51% of revenue come from outside Europe. The tipping rate is slower that we would expect – we believe it was c50% at the end of 2010. The Americas grew 12% and represents 36% of total revenue, Asia was up 8% and is 15% of total revenue. Europe (effectively the UK as most of Fidessa’s clients trade through London) was 49% of total revenue, but grew just 2% due to the Eurozone issue and general market conditions.
Overall, new customer wins are compensating for losses and enabling some gain currently but the company needs to increase the acquisition rate through international growth and the derivatives offering to arrest the overall downward revenue trend.
