Financial software grows

Royalblue's results today were fundamentally good - though currency issues took the bloom off them and the stock price fell.

Royalblue is seeing growth in revenues at 27 percent coming through to the bottom line, with good cash conversion. And since a lot of that revenue is coming from services rather than software sales,
growth should continue strongly in the next financial year.

One of the most interesting facets of the results for me, though, wasn't the building of recurring income. It was the move to multi-asset trading and the first sales of Fidessa's multi-asset platform.

I suspect the days for single-asset platforms are over - at least where mainstream assets are concerned. You can't do proper risk management if you have to reconcile data on different asset classes from independent silos of information. So gradually, equities, derivatives, and bond trading data are all being brought into single systems.

There will still be a place for specific corporate actions systems. But trading platforms and risk management are increasingly driven by the need for cross-asset support. Commodities will surely be the next market to be brought into the fold - where it hasn't already.

I couldn't help noticing a line in the report that mentioned the strong M&A market. We've seen a lot of mergers in the financial services software market over the past couple of years - but I don't think the consolidation process is over yet. Two years ago, it was being driven by distress - now, it's being driven by success, with strong revenues (and strong cash reserves in Royalblue's case) supporting the ambitions of the larger companies. Watch this space.