The least interesting part of asset management portfolio analysis software company StatPro’s results are frankly the numbers. These are basically fine given the journey they are making, with revenues for the year to 31st Decemeber up 5% (as reported) to £33m (+2% at constant exchange rates), and as expected, operating margins were lower, down from 22.5% to 19.1%. There is a lot of other ‘financial’ stuff which I’m sure the equities herd will want to get their teeth into, but I would rather concentrate on the business model issues.
And as we have previously highlighted (see Statpro takes charges to shift to the cloud), it really is all about the Cloud. To be more precise, it’s about ‘off premise’, as Statpro offers a traditional hosting service for its legacy Statpro 7 product (indeed, you can’t buy it ‘on premise’ any more) and is building a true SaaS version (‘Cloud 7’) which should be out in the market in a couple of years. Currently about 30% of Statpro 7 revenues are hosted, and CEO Justin Wheatley and CFO Andy Fabian told me a short while ago that there is no reason why it couldn’t reach 40% this year.
But the real growth opportunity should come from the new Statpro Revolution product, which is entirely SaaS. It went live earlier this year and is the platform that Wheatley and Fabian primarily see as Stapro’s entrée into new markets, especially for smaller asset management companies in emerging economies. For the first time Statpro will use a network of distributors to market, install and support the service (the first distributor agreement is already in the bag). Wheatley and Fabian outlined to me the channel commission model they have devised for Revolution and it seems eminently pragmatic.
And this truly is the point which we keep hammering home. For a traditional on-premise software player, moving to the Cloud – be it with true ‘as-a-service' offerings, or even with rebadged hosted services – requires major changes to the business model and product set. Statpro has ‘got it’ and is doing it. There is pain – especially on the financials – but frankly this is the cost of staying in business. Good luck to them!