Big data analytics business First Derivatives (FDP:AIM) has scrapped its half year dividend after reporting a fall in first half profit as rising R&D costs, project delays and longer sales cycles because of the coronavirus ate into modestly higher revenue.

The AIM-listed IT company reported a 2.3% decline in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to £21.5 million. This came from 2.5% more revenue on a year ago at £120 million. Pre-tax profit fell 12% from £8.4 million to £7.4 million.


First Derivatives sells software and consulting services largely to the financial services industry, including banks, brokers and hedge funds.

Revenue earned selling marketing technology as the pandemic squeezed marketing budgets post the outbreak was the biggest drag, according to Megabuyte analyst Rob Warensjo.

But the analyst pointed out a much better half for cash flow, an area where First Derivatives’ performance has not always been very strong.


‘Operating cash flows ran ahead of EBITDA at £24.3 million which, combined with £5.6 million share capital issue proceeds, easily funded outflows’, Warensjo said.

Cash spent included £7.5 million of capital expenditure, £2.7 million of interest payments and a £0.4 million tax bill.

This saw First Derivatives’ net debt cut from £79.1 million to £58.4 million.

‘First Derivatives’ outlook should benefit from a base of predictable revenues in a resilient market, and could even receive a boost from a rebound in marketing spend’, said Warensjo.


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Issue Date: 27 Oct 2020