First Derivatives off to the shops
Earlier this month First Derivatives, the supplier of Fast Big Data solutions, reported excellent first half figures, see …a winning formula. At the same time, the company stated its intention to redouble its efforts to extend the use of its high-speed database technology into more verticals.
Management has lost no time in declaring its hand in the retail analytics market, having recruited a team of retail technology specialists with experience gained in the likes of Asda and Walmart. First Derivatives had already had exposure in the retail business by working with Cisco and HPE to drive better customer profiling and lead management. The new team will now be looking to broaden the types of retailers that can benefit from faster data analysis. First Derivatives' portfolio will aim to support decision-making in terms of directed propositions and offers and to improve inventory management and internal processes.
When we spoke with the management at the time of the results, they were confident that the company can build a strong position in the retail analytics market. It certainly offers significant potential, as the company quotes market size statistics of US$5bn and annual growth of 19%. Building a business in the retail vertical may take some time, but the company’s momentum in its core business should ensure good growth at both the top and bottom line. We can expect additional initiatives to exploit other verticals in the not too distant future.|
|Entry into Retail Analytics market
FD (AIM: FDP.L, ESM: FDP.I) announces its entry into the retail analytics market, using its Kx technology as a platform to develop solutions under a team of leading retail technology specialists recently recruited by the Group. The move opens up an addressable opportunity which, according to MarketsandMarkets, is expected to grow at 19% per annum to be valued at more than $5 billion per annum in 2020.
The explosion of data volumes in the retail industry is driving demand for technologies that can provide real-time analysis, which Kx, with its pedigree in handling the most demanding data challenges in capital markets, is ideally placed to meet. FD has demonstrated the capabilities of Kx to a number of leading retailers across various market segments and as a result has identified an attractive range of solutions delivering high return on investment for prospective retail customers. These solutions include analytics combining streaming and historical data around point of sale, inventory control and planning, loss prevention and customer insights. Kx's ultra-high performance, enhanced by predictive analytics and machine learning capabilities, provides the ideal next generation platform for retail analytics.
|Very significant volumes traded today 75k plus shares (similar to yesterday). Edit - 138k by close of day!!!!
virtually all above 2100 - so very positive for a new floor on the share
15% share price appreciation from here is very likely|
|Very strong volumes today consolidating yesterday's rise
This is a notorious difficult share to acquire due to illiquidity ,however after results there are always some employees cashing in some options. Good time to get stock as when the supply dries up the share price will move on significantly|
|The thing that is not so clearly understood is the uniqueness of the KX platform and its world beating application in MarTech.
Analysts are valuing this company based on what it was 3 years ago which was a consulting and reseller of Kx skills to the financial market. Now it owns Kx and have developed phenomenal software capabilities not just for Finance but specifically for high end marketing.
Watch this get rerated very soon as new money sees the valuation gap here|
First Derivatives management integrate a winning formula
At the time of the First Derivatives full year figures in May, we predicted a successful performance for the current year and the H1 figures announced today fully endorse our optimism. This provider of Fast Big Data Solutions has beaten expectations with revenue up 34% to £72.4m and Adjusted EBITDA ahead by 26% to £13.6m.
The Managed Services and Consulting business (60% of revenue) advanced by 21%, at what management consider to be a comfortable cadence, balancing the growth objective with the need to maintain quality. The company now has a 20-year history in serving the capital markets industry and is deploying this experience and a strengthened management team to take on bigger and more strategic contracts.
The software business, centred on the high-speed Kx Fast Big Data platform, grew by 60% over the year. In Financial Markets, where the customer list already includes many of the top names, revenue was still able to grow at over 50%. Here the FD products were deployed to meet new analytical and compliance requirements, often on an enterprise-wide basis and displacing incumbent suppliers and in-house developed systems. Management are also investing in new verticals, having seen the success in Marketing Technology, where the Kx platform provides predictive analytics and lead management for large retail operations.
The First Derivatives team has a winning formula built on the Kx platform and its established position in Financial Services. It now sees the opportunity to exploit this technology in new verticals. Consequently, the required investment may take some of the shine off the bottom line’s rate of progress over the next couple of years. Nonetheless, we would still look for a consistent and creditable financial performance as management take a level-headed approach to realise this company’s undoubted potential.|
|Yes I read that last night and think that the valuation is overly pessimistic. It always has been by IC and really if you look at this share performance and revenue growth over the last 5 to 10 years it is a classic IC share advice which they got badly wrong to date...|
|I.C on line comment this am
Investors in First Derivatives (FDP) may be rubbing their eyes, but the data analytics group's stellar growth isn't an illusion. Revenue - excluding acquisitions, currency movements and one-off items - leapt by more than a quarter in the reported period, driving underlying cash profit up about a fifth.
First's recruiting efforts, technology upgrades and sales and marketing investments underpinned its gains. The group hired more consultants and won a bunch of managed-services contracts, sending divisional turnover up 21 per cent to £43m. But the greater gains stemmed from its software tools, which management say are used by every one of the 10 biggest global investment banks to analyse and visualise vast volumes of financial data. Software sales surged 60 per cent to £29m as management fulfilled contracts penned last financial year, both in financial services and newer sectors such as marketing technology.
Broker N+1 Singer expects higher costs to balance out First's continued momentum. It forecasts adjusted pre-tax profit of £20.8m for the year to February 2017, giving EPS of 60.2p, rising to £23.5m and 66.2p in FY2018 (from £16.8m and 51.7p in FY2016).
FIRST DERIVATIVES (FDP)
ORD PRICE: 2,085p MARKET VALUE: £513m
TOUCH: 2,056-2,089p 12-MONTH HIGH: 2,114p LOW: 1,430p
DIVIDEND YIELD: 0.9% PE RATIO: 54
NET ASSET VALUE: 504p NET DEBT: 13%
Half-year to 31 Aug Turnover (£m) Pre-tax profit (£m) Earnings per share (p) Dividend per share (p)
2015 53.8 4.6 15.0 5.0
2016 72.4 7.0 20.5 6.0
% change +34 +52 +37 +20
Ex-div: 10 Nov
Payment: 5 Dec
*Includes intangible assets of £159m, or 645p a share
First is signing big contracts with blue-chip clients and eyeing large markets such as telecoms and the internet of things. Its focus on subscriptions has improved revenue visibility, while its international footprint has so far insulated it from Brexit-related effects. However, First's shares are priced for perfection at 31 times forward earnings for FY2018 - a sharp premium to peers that leaves no room for error. Hold.
Last IC view: Hold, 1,800p, 17 May 2016
By Theron Mohamed,
01 November 2016|
|FDP now ranks at about number 30 in the AIM 100 list and if it were to transfer to the main market it would not be far from joining the FTSE 250. Market cap of 514 million would make it about number 360 on the list according to sharescope.
Mr Conlon must think that a main listing isn't necessary to increase the standing of the company in it's customers eyes!|
|Exactly! Hugely confident statement for a usually prudent and measured company. This is the most exciting thing I have heard since holding this company for almost 10 years...|
|This was the sentence that caught my attention
" The scale of the data analytics challenge is such that we believe that there is no competing technology that could generate results in a time and cost efficient manner that would enable it to compete with our solution."|
|Once it hits 25 I can see them doing a 1 to 5 share split... 25 will be hit before full year results are released next May , I am certain|
|as another contributor to this thread said recently..
a share split would be a great idea... surprised not happened before now..|
|Superb set of results. Key highlights for me are the growth in software sale, software branding simplification and the outstanding comment that the MarTech capabilities are clear world best in class! That last statement is astounding and such capability I worth the entire company valuation in itself!
Great confidence in future period growths too.
Excellent share to acquire and hold|
|Strong update. share price responding.|
|Interestingly there does not appear to be any buying before results on Tuesday. So the share is on the same valuation as it was on 1st June some 5 months ago.
Therefore if we have good news I can see this kicking on further...|
|Moved above £20 bid once again so I expect some buying pre-results. A share split might be useful to improve liquidity now that these are moving up nicely. The share price moves energetically in both directions so there are trading opportunities but it is a well run company that is a niche player in important markets which makes it a solid hold for me.|
|Well press release as it turns out informing results will be on 1st Nov
No comment about trading - so it must be in line with analyst / market / last release expectations|
|trading update tomorrow?|
|Very bizarre trading day on this share... no clue as to what is happening!|
|5% drop anyone?|
|looks like no trading update :(|
|This was the last market Statement
The current financial year has started positively, with continuing high levels of growth in consulting and further progress in software. We are confident that our high level of repeat and recurring revenue provides the foundation for another year of strong, profitable growth. In software, the full-year impact of deals signed during the past year, coupled with a strong pipeline, provides confidence that we can again generate good growth at high margins. We also expect to make further progress in positioning our software in sectors beyond financial services. In summary, we expect another year of strong growth, at least in line with market forecasts and to continue to invest for growth in later years.
I would like to thank the staff of FD and my Board colleagues for their hard work in achieving another successful year of growth for the Group.
16 May 2016
Will the company update the market ahead of interim results???|
|stock seems to be in short supply!
Buy just gone through at 2087|
|yes significantly ahead is what i am hoping for over the next 2 weeks|