Derivatives software provider Ffastfill had a great year last year (see Ffastfill fast filling profit gap) but looking at today’s trading update for the first half of the year (to September 20) its profits look precarious.
Although revenue for H1 is expected to be slightly ahead compared to the previous year, operating costs will be higher than planned (by £700K) with the result that operating profits will be broadly breakeven. Our concern is that it doesn’t take much to tip from breakeven into a loss. Derivatives trading software provider Patsystems (see Patsystems cautions on H2 profits) has just warned that its profits for the year to December 31 will only be “modest”.
Ffastfill’s costs arise from additional infrastructure and more sales and marketing activity to drive growth outside the UK. It also incurred additional costs “in support of three back office implementations which are now expected to pass customer acceptance before the end of the calendar year.” The maxim that you need to spend more to make more is not working for Ffastfill at the moment - but investments also need time to get to work. However, the company does not expect the growth market investments to start generating a return this financial year. SaaS growth is expected to be 8% for the half year, which is reasonable.