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Arcontech, the AIM-listed software minnow for the financial markets, fell short of its sales forecast for the year ended 30 June due to the ‘increasingly long sales cycles of the major investment banks’ and a ‘disappointing’ uptake of its contract for difference (CfD) and spread betting product AXE. Investors bet on Arcontech by slashing 11% off its share price.
Overall Arcontech’s revenue, for the year to 30 June, grew 21% to £1.29m, and it narrowed its operating losses to £818k from £919k in the previous year. Its cash position however halved to £841k due to a sharp increase in R&D on its CityVision sell-side market data products. Nonetheless, Arcontech should be able to keep its head above water, barring any further deterioration in the market, since it entered the new financial year with contracted recurring revenue of £1.54m, covering c73% of its expenditure.
Arcontech is placing its own bets in the ‘cross-connectivity between the major data vendors’ such as Thomson Reuters and Bloomberg. For instance it invested heavily in the year to integrate its CityVision products with Bloomberg systems, hence the increase in R&D costs. Consequently, Arcontech is now putting all of its sales effort into selling CityVision, including its Excelerator real-time desktop product, for which it claims the opportunities ‘are proving exciting’. Unfortunately for Arcontech, its limited financial resources will make it far more difficult to invest further in the current year.
