Solid end to 2018, supportive contract wins
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.