As Fidessa rolls out service-based solutions as part of its growth strategy (see our UKHotViewsExtra: Fidessa building on solid foundations), it could probably learn from observing the progress of StatPro as it moves its investment portfolio analytics business entirely to the cloud. TechMarketView subscribers can access the Fidessa piece here. If you are not yet a subscriber, please contact Deb Seth to gain access.
Interim results for StatPro were as expected and we commented on them briefly at the time of their initial release in our HotViews on July 16th.
StatPro started the transformation to cloud from a strong position, with a global installed base which relies upon its specialist software in a complex and crucial element of the investment management value chain and an injection of £6m cash from shareholders.
Now the company has to manage a balancing act as it walks the tightrope to cloud. Costs are rising. Sales and Marketing expense is being ramped up to access the wider market of smaller users made economic by cloud delivery and R&D costs continue to rise (to 14% of total revenue). The company is making progress in moving customers to move to the cloud –delivered software, Revolution. The half year showed good progress here, with the revenue run rate for Revolution rising to £2.4m, more than double last year and now a quarter of revenue is generated by customers whose subscription includes Revolution.
As the business transforms to cloud delivery, StatPro will benefit from much lower support and maintenance costs, better productivity in development and a potentially much larger revenue roll, particularly when its largest product “Seven” is replaced by Revolution+ which is now in beta trials. Sales of Seven software licences currently generate 80% of recurring revenue. Revolution+ will be launched at the end of 2014.
As can be seen, there is still a long way to go and execution, particularly in the process of migrating customers and their data, will be key. But so far, so good. We will watch with interest.