First Derivatives is still managing to pump up revenue and profits despite its transition to a transaction and recurring sales model – and a tough market. However, the UK is not faring as well as the rest of the business, with revenue down c3% yoy in H1.
For the six months to August 31 2012, the supplier of software and consulting to capital markets delivered a 23.3% revenue increase to £27.6m and PBT of £3.5m. Additional international business was good for the company but meant the UK proportion of the business dropped from around 45% to c36%. However, actual UK revenue also slipped back from £10.2m in H1 last year to £9.9m (see here).
Software sales growth was pegged at a modest 7.2% but transaction and recurring revenue jumped 40%, which is a good indicator of progress. The cost of the transition was made apparent - one off license fee revenue dropped c16.9% and there was also a 60.1% drop in legacy technology income. Consulting contributed £20m to overall revenue (30.7% yoy growth) and is helping smooth the transition. Although revenue growth is slowing (it was 26% in H111 and 24% in FY11), double-digit revenue growth and increased profits during such a transition is an achievement and is helped by the relatively small size of the company and its tight area of focus.