Profits surge at First Derivatives after ‘major’ deal

Profits at Newry-headquartered technology company First Derivatives grew 12 per cent in the first half of its financial year helped by “notable deals” including one with a “major Japanese bank”.

The company, which provides trading and risk management software systems and consulting services to the capital markets industry, said profit before tax increased 12 per cent to £8.4 million (€9.72 million) in the six months to the end of August from £7.6 million at the same point last year, while revenue rose 11 per cent to £116.7 million.

Software revenue accounted for the majority of that total revenue figure, and rose 13 per cent to £71.4 million helped by growth in recurring licence revenue. Managed services and consulting revenue rose 7 per cent to £45.2 million, down from the double digit growth seen over the past number of years.

Speaking to The Irish Times, chief financial officer Graham Ferguson said that did not signal a new trend and that the consulting business would return to double digit growth.

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The company’s primary platform – Kx Technology – analyses vast quantities of data enabling rapid development of new applications. It recorded 18 per cent growth in the period.

Aside from the contract with the Japanese bank for its Kx platform, First Derivatives also signed a deal with a high-profile Formula One team, adding to its work with Aston Martin Red Bull racing.

The success in the period was overshadowed by the death of the company's founder and chief executive Brian Conlon in July. Conlon has been replaced on an interim basis by non-executive chairman Séamus Keating while the company continues with its chief executive recruitment process.

Mr Keating said the company doesn’t want to put a timeline on finding a replacement chief executive. “Our expectation and desire is to do it well rather than do it quickly,” he said.

Pipeline

Looking forward, the company said the investment programme undertaken in recent years had generated a “strong pipeline of opportunities” across its business. However, the company’s net debt in the period stood at £60.2 million, up from £24.2 million at the same point last year. Mr Ferguson explained that the increase is well inside the company’s “banking headroom”.

“Now we’re at a peak net debt position and that will continue to fall off unless we decide to do something strategic,” he said.

“Our financial performance was solid and we are encouraged by the growing momentum through the period that provides confidence in achieving another year of strong growth, in line with consensus forecasts,” said Mr Keating.

“We successfully executed on our strategy during the period, signing a number of key contracts across our business, and making strong progress towards securing landmark contracts in the markets we are targeting across industry,” he added.

First Derivatives, which services the top 20 global investment bank and numerous regulators and exchanges with its fintech software, employed more than 2,400 staff during the first half of this year.