FY11 results show that the SaaS transition is being more keenly felt at StatPro now that the company has intensified its efforts, but as we noted in Targeted apps and focused market aid StatPro’s SaaS transition, we still believe it is managing the move well because of the tight scope of its business.
Revenue for the year ending December 31 was down 4% to £31.7m, with profit before tax down a more startling 31% to £3.9m, and adjusted EBITDA down 28% to £6.1m. On the upside, annualised recurring revenue was up 4% to £29.4m. The real story is behind the numbers - in the decision to move the company wholeheartedly over to SaaS, which is the cause of the drop in revenue and profits.
Nine months in and revenue from the SaaS-only Revolution offering is building - £0.5m annualised revenue by the end of FY11 – although gains were more than outweighed by direct Revolution costs of c£2.5m. Further upheaval can be expected as the existing on premise Seven product effectively goes into maintenance mode and is replaced by a cloud version in 2013. Chief executive Justin Wheatley told us that that over a period of five years its on premise products – and the bulk of the customer base – will have converted to a SaaS model.
Rather than drawing the pain of the SaaS transition out, StatPro is accelerating the strategy, taking what we expect will be a short term hit for longer-term gain. Customers area adopting Revolution and with all sales efforts focused on SaaS product sales as of January 1, this will no doubt accelerate. From what we hear from Wheatley, the go to market strategy is strong and the company has clear targets in it sights. It also plans to leverage it contacts with its Fund Administrator clients to enlarge its distribution capability. There are also plans for an online stire in H1 2012 which will help draw additional sales. Our feeling is that profit and loss will continue to be hit in 2012 but we should start to see some improvements. Wheatley says StatPro launches typically go through a three year cycle – year one is all excitement, year two is when the hard slog begins and contracts start to appear, year three is when it starts to reap the benefits. Revolution will hit year two stage during 2012, with the real rewards set for 2013 and beyond.