Posts Tagged ‘financial’

3 Financial Software Names Showing Relative Strength

December 27th, 2013

Software firms are in business to help firms operate more efficiently. The software sector is a big one, though, filled with different sub-groups. Some software makers are showing strength. Others are not.

In IBD’s database, the computer software sector is composed of 10 sub-groups. Enterprise and medical software makers have led the market over the past six months, but gaming and desktop groups have lagged.

IBD’s Computer Software-Financial group houses just 13 stocks. Ten of them have Composite Ratings of 90 or higher. Three months ago, the group ranked 91st out of 197 groups ranked by IBD based on six-month price performance. As of Thursday’s IBD, the group had risen to 37th.

One of the leaders in the group is Pegasystems (PEGA). The company makes business process management software for the financial services industry. It’s been consolidating gains tightly for nearly four weeks, holding above its 10-week moving average. Pegasystems is thinly traded, but mutual fund ownership has been accelerating in recent quarters.

ACI Worldwide (ACIW) is another top-rated name in the group. Its software facilitates electronic payments worldwide. In its latest reported quarter, earnings jumped 79% from a year ago to 52 cents a share. Sales rose 38% to $213.9 million. In 2014, full-year profit is expected to soar 50% to $3.05 a share.

Advent Software (ADVS), meanwhile, is trading tightly and holding near highs as it works on a flat base with a buy point of 35.93.

SS&C Technologies (SSNC) is also a highly rated name in the group. After a couple of flat-base breakouts, the stock continues to hold above its 10-week moving average, 2% off an all-time high.


Large Enterprise Cloud Financial Accounting Software Adoption

September 10th, 2013

About a week ago, I posted a lengthy piece on cloud financial accounting software. I made the case that cloud financial accounting software had, for the SMB space, “crossed the chasm”. It’s gone mainstream. CFOs and Controllers aren’t going back to on-premises solutions.

Not every financial accounting solution does debits and credits. Beyond the general ledger, accounts payable, fixed asset and other transactional systems, there are some other important financial accounting solutions that assist in cash management, planning, budgeting and more.

These other financial software products are also moving to the cloud. When I interviewed finance executives this summer, some of them identified several planning, budgeting, banking and treasury solutions as part of their growing contingent of cloud solutions in use at their firms. They want 24/7 access to cash management, financial planning, budgeting and other solutions. Cloud solutions, particularly those that also power mobile and tablet devices, are sought after solutions.

Let’s look at some of these products.

Adaptive Planning made a couple of announcements today. This firm has rapidly expanded its product line and customer base in the last couple of years. In recent releases, the company has significantly expanded its analytics/BI functionality and added a fairly solid consolidation product to its core budgeting and planning software.

In today’s announcements, Adaptive Planning has added collaboration capabilities to its consolidation application. They’ve also added a business process management tool (Process Tracker) and more powerful (and easier to use) reporting/dashboard tools to the suite. The reporting enhancement lets users add more operational data to the Adaptive in-memory data store. This expands the BI/Analytic capability to provide value beyond the accounting/finance staff.

The bigger story though may be the speed with which Adaptive is introducing these product enhancements, new products and new capabilities. It’s a rate of change that hasn’t been seen (recently, if ever) in the on-premises world of similar products. Cloud solutions, especially multi-tenant cloud products, are most cost-effective for a vendor to support (because there’s usually only one release to support), upgrade (as there’s only one tech stack to support) and test (with only one environment to regression test).

It then comes as no surprise that Adaptive is adding a lot of customers and business partners. If my notes are correct, they now have approximately 1700 customers and about 400 partners. It’s also noteworthy that more large enterprises are adopting these products. Bigger firms have more of a need for consolidation and sophisticated budgeting/planning/reporting tools. Bigger firms also want more modern and mobile applications. They aren’t seeing a lot of fast innovation from older vendors in this space. This adoption of cloud planning and consolidation software into larger enterprises is happening in this space while adoption of cloud accounting software (like ledgers) is going strong in the SMB (small to medium sized business) market.

I’m not surprised CFOs are reporting more market uptake of products like Adaptive Planning.

I also spoke with Bob Stark, VP of Strategy, of Kyriba this summer. Kyriba is another financial software firm experiencing great growth. Their expertise is in another financial accounting sector: the treasury/cash management space.

Kyriba has cash/liquidity, payments, risk management, banking relationship and other solutions. All of these are cloud based. The company has two main product lines:

Enterprise – which is targeted to the world’s largest companies and frequently competes with offerings from major ERP, Wall Street and niche firms
Pro – which is targeted to smaller businesses and may displace spreadsheet and home-grown solutions
Kyriba module overview
Image courtesy of Kyriba – Used with permission

I like Kyriba’s origin. The company was founded in Paris (but now headquartered in California). European software firms often possess great multi-currency and global finance capabilities early in their product development as their initial customers are often doing business in dozens of neighboring countries.

Market uptake for Kyriba’s solutions has been strong. The firm now has several hundred customers and significant year over year growth. If my notes are right, they are adding a good 100+ customers a year now. Even several large banks are white labeling the product to their customers.

Treasury solutions are almost mandatory for any company of any size. You can’t very well pay suppliers, employees and debt holders if you don’t know what cash you have, when it’s scheduled to arrive, etc. Moreover, there are certain risks (e.g., key customer payment is received late or is disputed) that must be accounted for in projecting one’s cash requirements. For cash-rich firms, the ability to invest excess funds (e.g., into over-night or longer-term duration instruments) can sometimes generate significant interest income. While interest rates in the U.S. have been at record lows for the last few years, that won’t last much longer. When I first became a consultant, a client of mine made more money investing excess cash than from their operations. Whether it’s cash flow management, investment opportunities, debt management, inflation management or risk management, these tools are a must.

I like this product line as it is cloud-based, full multi-tenant and very high-end. It represents what great financial software products can be in a cloud deployed manner. I’m tired of hearing older vendors state that cloud solutions are immature or targeted to small businesses. These detractors need to look at what Kyriba (or possibly Adaptive Planning) can do for very large businesses. I’ll be at Workday’s event this week and will be listening intently for clues as to the maturity and market uptake of their financial software with larger enterprises.

Bottom Line: Cloud adoption of financial software is crossing the chasm. The core financial transaction systems are seeing solid uptake in the SMB space. Larger enterprises are adopting solutions in the Treasury, Budgeting, Planning, BI and other areas. I suspect all sectors will see uptake from all sized businesses especially as vendors round out their product lines and functionality.


Silver Lake Sumeru Invests in Financial Software Firm BlackLine Systems

August 16th, 2013

Silver Lake Sumeru, the middle-market investment group of the private equity firm Silver Lake, said today that it will lead a group in a strategic investment in BlackLine Systems, a Los Angeles-based financial software firm.

Terms were not disclosed, but sources familiar with the terms of the deal peg the investment at north of $200 million. Silver Lake Sumeru will be the majority shareholder; other investors include Iconiq Capital, a multifamily office for a group of wealthy individuals, and BlackLine’s existing management. Therese Tucker, the founding CEO, will continue to run the company, and will maintain a “significant” equity stake.

The investment is intended to help the company boost its international growth. The deal was led by Hollie Moore Haynes, Silver Lake Sumeru’s managing director. She will join BlackLine’s board of directors, as will Will Griffith of Iconiq.

BlackLine specializes in cloud-based software for managing financial-close processes. Usually, closing out big transactions is an old-school process that involves a lot of work in spreadsheets, and a lot of paper. BlackLine Financial Close Suite automates the process, and creates a trail that’s easy to track in an audit. The company’s list of 700 customers includes AT&T, Boeing, Northrop Grumman and United Airlines. Sales have grown by an average of 50 percent a year since 2006, and are up 55 percent in the first half of this year.


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