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Tuesday 06 November 2018

Software drives strong H1 for First Derivatives as it moves to the edge

logoThere was plenty to like in the H1 results from high speed database technology and Big Data solution provider First Derivatives.

Revenue grew 20% (organically) to £105.6 in the six months to 31 August 2018, with PBT also up a strong 20% to £7.6m despite heavier R&D investment and sales and marketing activity, indicating a commitment to sustainable growth. There is growing strength in software -  revenue up 21% to £63.1m and now 60% of total revenue - as the Kx high performance analytics database continues to make its presence felt. With 19% growth to £42.5m, Managed Services and Consulting Services was no slouch either.

Most of the revenue still comes from FinTech (£82.7m, up 24%) but the shape of the business continues to change and MarTech contributed £19.8m during the period. The 8% increase looks sparse but included a 42% increase in subscriptions for the Kx powered cloud marketing solution. Activity slowed as organisations thought through GDPR implications, impacting software services revenue in Europe in particular. Several deals have closed since the end of H1, suggesting marketing spending is rising again. Geographically, although the UK has grown, the rate of growth lagged the US and rest of Europe, as was the case at the end of the last financial year.

A key part of the company strategy is expansion into new markets. With just £3.1m revenue ‘Other Markets’ is small but grew 12% with some good wins in new sectors. The management team says the pipeline is building on a several fronts – and there is evidence of sensor analytics driving demand in high tech manufacturing, utilities and automotive (building on the Red Bull Racing contract). The company’s edge of cloud ambition could open up all types of new sectors, the question is when a breakout can be expected. Having spent 3-4 years building a footprint, the company is anticipating returns will be evident from as early as the next financial year and that in 3-5 years it will have a very broad range of customers outside the FinTech area. That bodes well for First Derivatives – and for broader market investment in edge of cloud analytics. 

Posted by Angela Eager at '09:51' - Tagged: results   cloud   software   FinTech  

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