StatPro’s trading update for FY 2018E follows a number of contract announcements from the Group during late December and January. Revenue and costs for FY 2018E ended around 4% and 5% below our expectations respectively with resulting EBITDA of £9 million still pleasingly in line with our estimate. This reflects a significant margin increase to 16% from 13.9% in 2017. CEO Justin Wheatley notes robust Q4 sales and reiterates that the Group is strategically well placed for growth. Revolution ARR (Annualised Recurring Revenue) increased organically by 17% in 2018. The contact announcements, as well as underpinning forward EBITDA estimates, highlighted the success that the Group is having in gaining new clients for Revolution and in transitioning existing clients from Seven to Revolution, usually on extended and more valuable contracts. They also reflect the strategy of supplying Revolution services to fund administrators and asset management service providers. There was a good-sized contract extension for Revolution Delta as well. We adjust revenue and expense estimates for both our forecast years but leave Adj. EBITDA estimates unchanged given the focus on margin.
In January, StatPro secured a three-year contract with one of its existing US asset management service providers for one of its clients to use StatPro Revolution, with a minimum contract value of U$1.5 million. Notably, this is its sixth client to use Revolution and the new client also subscribed to StatPro Revolution for performance and risk services.
Also in January, the Group secured a five-year contract with a UK investment manager converting from Seven to Revolution with a minimum contract value of £1.45 million and significant uplift in value.
Additionally in 2019, StatPro announced a three-year contract extension with a large UK investment manager for Revolution Delta, with a minimum contract value of £2.35 million. The contract extension underlines StatPro’s ability to provide Revolution Delta clients continuity of service via its Revolution platform and avoids clients needing to make a decision on retaining the service.
In December, StatPro had highlighted a three-year contract with a large European insurance group (an existing client) for its Revolution Delta service, with a total contract value of £1.125 million, which greatly extended the client’s use of Revolution Delta's services.