Statpro's Wheatley confident of Revolution's "vast potential"

StatPro (LON:SOG) chief executive Justin Wheatley said it was the “vast potential” of the company’s new Revolution product and the encouraging early uptake which prompted a shift of sales focus outlined earlier today.

Revolution is a low cost, high spec cloud-based analytics package for fund managers, which was launched at the end of last March.

And in just nine months it has built a commendable revenue base of just under £500,000 after it signed 50 clients.

This contrasts with 250 clients amassed over more than a decade for the company’s existing platform, StatPro Seven.

Seven generates around £29 million of sales a year and has a 92 per cent renewal rate.

However the company’s broker, Cenkos, estimates that sales are declining at around 7 per cent per annum.

Against that backdrop, it made sense to concentrate all the sales effort on the new, growing Revolution product, Wheatley said.

“We are totally focused on Revolution,” he added. “It represents a vast market.

“We have 50 clients in nine months versus 250 for Seven in 12 years. “This really puts it in perspective - the rate at which one can gather clients.

“There are thousands of potential clients around world.

“We need to get cracking. The sooner we do, the sooner we pile on revenues.

“We can’t know or hazard a guess at what these potential revenues might even be.

“But we know if we focus on it we will get there quicker than if we do it piecemeal.”

Cenkos predicts that Revolution revenues will total around £1.25 million this year, though it has also reined in its 2012 earnings prediction.

“It is possible that this year we will have slightly lower revenues,” said Wheatley

“But what we plan is a more productive use of our time and money.

“Revolution is an incredible opportunity. Seven, meanwhile, has reached the limit of what we can do with it. We need to go with something and it is quite exciting.”

The range of clients and the geographic spread of the new sales marked Revolution out as a product with true global potential.

It was also used by customers ranging from the small, independent fund managers with several million under management to a large, multi-national bank.

“This shows that Revolution is applicable over a number of verticals, which wasn’t the case for Seven. It has a very broad appeal,” Wheatley said.

The change of focus will lead to an annual cost reduction of around £1.6 million at a one-off cost of £800,000.

The StatPro chief executive is keen to stress that Revolution is not a replacement for Seven.

The first module of the Seven replacement will be launched next year and will be called Revolution Plus.

In a wide-ranging update on trading, StatPro said net debt had fallen to £3.4 million as at the end of last year from £5.5 million previously.

Lower consultancy income will result in revenues being “marginally lower” than expected, it was revealed.

But costs have been tightly managed so earnings are expected to be in line with forecasts. Cenkos is predicting EBTIDA of £6.1 million for the year.

Analyst Andy Bryant said: “Seven will remain a highly valuable and cash generative revenue stream into the medium-term- even on declining sales - and Revolution will ramp significantly over the next 24 months (both from existing and new clients).

“If management is successful then the value for shareholders is clear (especially as StatPro currently has no serious software as a service competition in this large market).”