GBT, page-5

A good run down from Selector's March 2015 newsletter (available on the webpage). The last paragraph is along my lines of thinking

GBST is emerging as a global player in the provision of software solutions for financial markets. The company has 66 million shares on issue and a market capitalisation of $360M at the time of writing. At its core, the company’s software business model delivers increasing scale benefits as more clients adopt the services offered.
GBST comfortably surpassed market expectations in the half year to December 2014. Pleasingly, revenue generated offshore surpassed domestic revenue for the first time. Operating earnings (EBITDA) and margins (EBITDA) both grew, while cash flow was a highlight. The company ended the period with no debt and with net cash, an important milestone delivered for the first time.
The United Kingdom was the standout region with three new customer implementations undertaken, taking the total to nine. Today, the GBST Composer platform is at the heart of UK regulatory changes that started eight years ago and which have resulted in the establishment of four million new mandatory pension accounts over the past three years.
The group is developing a very strong reputation in the UK for software solution delivery, successfully deploying projects on time and on budget. This is in stark contrast to its nearest competitor Bravura who undercut GBST to win three significant deals. Our understanding is that their aggressive pricing has really bitten both the competitor and the clients. Each of the three implementations have suffered delayed start dates and cost overruns that are significant enough to see Bravura closed to new business.
GBST has a strong pipeline in the UK and we expect to see an additional two to three new implementations in the second half of 2015. Margins will continue to improve as scale is achieved.
Australia is the cash cow of the business. It is a more challenged market and a similar performance is expected in the second half of 2015. Some projects have been delayed but they have not gone away. In fact, according to the company the pipeline of new work has improved.
Recent announcements relating to the business in the USA reflect the very strong performance of the foundation client, Raymond James, and the importance of achieving business scale. While Raymond James has entered into a second phase of work, GBST is in need of another client. In response GBST has put what appears to be a strong and experienced senior management team on the ground in the USA for the first time in order to secure new
position to provide a global solution. This should yield success in the years ahead.
As a specialist financial software service provider GBST is growing rapidly (maybe even straining at the sides a little) and has publicly stated that it is disappointed that it is not executing at a more rapid clip. In the half GBST announced a distribution agreement with managed services behemoth SAP. SAP has a very sophisticated sales network with access to the world’s leading financial customers.
The initial agreement will see SAP distributing a single GBST module developed for Europe’s Financial Transactions Tax, a stamp duty type tax levied on all transactions – a typical knee jerk reaction from cash strapped regulators and Governments post a global financial crisis type event.
Early success will likely see this relationship extend to cover sales of core GBST products which have been built so as to be compatible with SAP’s product suite. While it is too early to pencil in numbers and build in expectations this relationship has the potential to deliver global SCALE … or more likely a corporate transaction.