First Derivatives’ FY2021 Profits Drop by 39%, Outlook Remains Strong

First Derivatives (LON:FDP), a technology provider to investment banks and other financial companies, reported a pre-tax profit of £11.1 million for the financial year 2021 ended on February 28, which is almost 39 percent down from the previous year’s £18.3 million.

The revenue and gross profits of the company, however, remained relatively unchanged with £237.9 million and £101 million, respectively.

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The Newry-headquartered company further highlighted that its results were ‘in line with market expectations’ and it is satisfied with the ‘robust performance’ despite the implications of Covid-19. It further pointed out that some of its customers delayed buying software and services in the initial months of the pandemic, but the market momentum increased towards the end of the financial year.

The adjusted EBITDA of First Derivatives for the period came in at £40.5 million, compared to FY2020’s £45.5 million, which is an annual decline of 11 percent. Adjusted diluted EPS also went down by 25 percent to 59 pence.

The company, however, improved its net debt significantly, which now stood at only £9.9 million, shrinking from £49.4 million reported at the end of the previous financial year.

Bullish Outlook

With multiple new contracts in the ‘key markets’, the technology provider is now aiming to double its annual revenue by the end of 2025. For the current year, it anticipated its revenue to be in the range of £255 million to £260 million with an adjusted EBITDA between £31 million and £33 million.

The company is now planning further investment into its Kx division, which is a major global player in real-time streaming analytics. Additionally, proposals have been made to rename the group as FD Technologies plc.

“Using streaming analytics to inform and automate operational decisions is one of the most important growth areas in technology today, and KX enables this for our customers,” First Derivatives CEO, Seamus Keating said in a statement.

“During the past year, we have positioned the business to scale rapidly to address this opportunity, by accelerating our technology roadmap, strengthening our leadership, developing our commercial strategy, and putting in place enhanced systems and processes to scale the Group. By increasing our investment in the business we unlock the potential for rapid growth and for KX to become a key part of tomorrow’s technology ecosystem.”