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Advent Software (ADVS) |
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WIKI ANALYSIS
Advent Software (NASDAQ: ADVS) produces software for investment management organizations and offers dozens of software products in addition to customized packages for individual clients.
Business Overview
ADVS's revenues flow from the sale of its software products - the more customers it wins, the higher its top-line revenues. The company spent $48.4 million on product development in 2009, which helped to build enhancements to preexisting software as well as new software products.[1]
Advent's most popular software products are "Advent Portfolio Exchange" ("APX") and "Geneva." APX is a portfolio management product that allows multiple users in a firm to manage client holdings, completes back-office operations like accounting, and provides reports through a web-based user interface. Targeted more towards hedge funds and larger asset managers, Geneva provides users portfolio management, accounting, reporting, and other relevant services for their daily activities.[2]
In order to better predict its revenue stream for future years, Advent converted the majority of its software contracts to long-term licenses, most of which are about 3 years long.[1]
Business & Financial Metrics[3]
In 2009, ADVS earned a net income of $36.9 million on $259.5 million in total revenues. This represents a 95.2% increase in net income on a 9.1% increase in revenues from 2008, when the company earned $18.9 million on revenues of $237.9 million. This significant increase in operating margin came from the reappearance of customer demand after the slow quarters following the American financial crisis. In addition, the acquisition of Tamale, the company behind research software "Tamale RMS," made a positive impact on Advent's profitability.[4]
Business Segments
Advent operates in a single reportable business segment. The company derives most of its revenues (37.9% in 2009) from licensing its software products.[5]
Key Trends & Forces
Demand is linked to financial services and general economy
Because Advent's software is sold to financial firms, the health of the financial services sector directly impacts Advent's revenue stream - when the American financial crisis hit, for example, new customer acquisition nearly halted and contract renewals dropped. When the sector performed better in 2010, however, the company saw the resurgence of demand for its software.[4]
The "software as a service" product model is gaining popularity
Advent's most popular products, Geneva and Advent Portfolio Exchange, follow the traditional software model; they must be installed on a computer to be used and save files locally. Companies like Google are pushing consumers and businesses alike towards cloud computing software. This software does not require installation but instead is accessed remotely from any computer with an internet connection.
Advent has developed Advent OnDemand as a cloud computing alternative to its other products.[4]
Competition[6]
Advent's primary competition actually comes from its own potential clients; because so many financial service companies develop their own proprietary software to meet their specific needs, Advent sometimes has trouble persuading target clients to switch out the software they developed themselves (often at great expense) to license its own software.
Other financial services software companies with which Advent competes include:
- Charles River Development, a subsidiary of Fiserv
- Bank of New York Mellon's subsidiary, DST International
- Portia, a subsidiary of Thomson Reuters
References
- ↑ 1.0 1.1 ADVS 2009 10-K pg. 13
- ↑ ADVS 2009 10-K pg. 8
- ↑ ADVS 2009 10-K pg. 35
- ↑ 4.0 4.1 4.2 Advent Software, Inc. Q4 2009 Earnings Call Transcript. Seeking Alpha (February 1, 2010).
- ↑ 5.0 5.1 ADVS 2009 10-K pg. 39
- ↑ ADVS 2009 10-K pg. 14
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