StatPro has said that 9M15 trading was in line with expectations. StatPro Revolution’s annualised recurring revenue grew to £7.2m over the quarter, from c £6.5m at 30 June 2015, and £4.3m (at constant currencies) at 30 September 2014. The Q3 performance is an improvement on Q314 and takes the SaaS revenue book to 25% of the recurring revenue total, which we estimate grew modestly on a currency adjusted basis to £28.8m. We are maintaining our forecasts, and, while the earnings multiples look punchy at first glance, this is due to ongoing heavy investment in the new cloud products. After some eight years of cloud software development, we believe revenue and earnings will begin to accelerate following the launch of the cloud replacement for the group’s core StatPro Seven product suite, which is on schedule for Q2 next year.
54% of the total software clients by value, or £13.6m, have now contracted for Revolution, up from 41% (constant currency) a year earlier and 52% at 30 June. These clients will be most inclined to transition to the Performance Module when it is launched, since they have an appreciation of the cloud products. We expect a significant conversion premium when customers shift to the Performance Module, as evidenced by a contract win earlier this year, which had a 55% premium. This is due to a significant reduction in the total cost of ownership of the more modern and powerful cloud software, including reduced headcount and IT support/hardware costs and the potential for customers to streamline their processes and systems.