In the fluctuating financial services environment Lombard Risk Management operates in, it is following what was a disappointing year by its standards (8% revenue growth – see here), with the expected H1 improvement but is still waiting for the boost regulatory change will bring. That equates to a lick of jam this year, but hopefully spoonfuls during 2013 and 2014 as regulatory change forces mandatory spend.
So far this year (six months to September 30), revenue has increased 20% yoy to £7.7m, which is slightly ahead of forecast. License revenue was up 6% to £3.5m which puts it at a similar level to recurring revenue of £3.6m (vs £2.6m). There is still some same to way go on the recurring revenue front but the metric is heading in the right direction – where it was 41% of total revenue last year, it now represents 46% of total revenue. The total revenue figure puts the company on route for its FY target but management expects performance will be weighted to H2 due to the timing of the COREP regulatory deadline and revenue recognition rules –it was unable to recognise significant revenue from a large deal that was signed of at the very end of H1 – plus the fruits of its risk management activities.
Although overall revenue has been pushed up, PBT is down from £1.8m to £1.3m due to product investments, of which there is more to come. Regulatory change necessitates spending by customers but it also keeps Lombard on its development toes and lays claim to a share of revenues. But with more regulatory change on its way Lombard can be reasonably confident of receiving its jam allocation.