First Derivatives (FDP) achieved significant sales growth in the first half, buoyed by a 32 per cent uplift in software revenue to £52.2m with recurring revenue up 44 per cent. Net debt also fell substantially to £13.1m, from £16.3m a year earlier. With a good pipeline in place for the second half, the full-year performance is now expected to “be slightly ahead” of bosses’ expectations.
Management perceives a serious market opportunity for its software business, which is known as ‘Kx’. Industry experts value the addressable market at more than $60bn (£51.8bn) per year. FinTech software revenue rose by 31 per cent to £31.2m. Meanwhile, MarTech’s recurring revenue was up a whopping 72 per cent to £6.9m, helped by a new predictive data analytics platform. First Derivatives is working to expand Kx’s applications across multiple industries, with progress already made in sensor analytics, the commercial space market, telecoms and healthcare. And in September, a “major investment” in machine learning was announced for Kx – providing access to new markets.
Greater demand for software implementations meant data scientists were redeployed away from the group’s consulting business. Sales growth there was thus weaker than previous years, although still a decent 8 per cent.
Analysts at broker N+1 Singer forecast adjusted pre-tax profit of £23.5m and EPS of 67.6p for the year to February 2018, up from £20.8m and 61.3p in FY2017.
| FIRST DERIVATIVES (FDP) | ||||
| ORD PRICE: | 3,459p | MARKET VALUE: | £875m | |
| TOUCH: | 3,466-3,515p | 12-MONTH HIGH: | 3,650p | LOW: 1,993p |
| DIVIDEND YIELD: | 0.6% | PE RATIO: | 101 | |
| NET ASSET VALUE: | 545p* | NET DEBT: | 10% | |
| Half-year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 72.4 | 7.0 | 20.5 | 6.0 |
| 2017 | 87.8 | 6.3 | 18.2 | 7.0 |
| % change | +21 | -10 | -11 | +17 |
| Ex-div: | 14 Nov | |||
| Payment: | 6 Dec | |||
| *Includes intangible assets of £159m, or 628p a share | ||||
