Shares in Quality Software Products Holdings Plc (QSP), the UK-based supplier of high-end, modular financial software, rose 9.6% to 567.5 pence yesterday after the UK-based outfit produced an impressive set of results. Net profits for the last financial year rose 73.4% to $7.5m on revenue that rose 47.1% to $67.4m. What drove the company forward was a new emphasis on services whose revenues grew 54.6% to $27.3m and will soon match product sales.
Writing original software may be the classic way to get an IT start-up off the ground but it is no longer the way that public companies impress the analysts that are watching them like hawks. Providing an outsourcing service to customers offers a continuing revenue stream and an ongoing dialogue as to what new software will offer improvements in productivity.
QSP has appeared to be an anomalous organization, providing high-end financial software in a world where major corporations appeared to be looking to the big ERP vendors as a solution to every major problem. But QSP’s success is confirmation that many large companies do not want to be locked into one ERP package. The company has also been adding features around the central accountancy tool, writing their own software where necessary but using products from outfits like Cognos where better solutions exist. QSP has also set up a net consulting unit to offer customers web site development and e-commerce expertise.
The real test of QSP’s expertise will be in the US market where, with stiffer competition, the company has managed to increase sales but failed to meet its growth targets. The company has recently beefed up its US management. If QSP can make real inroads in the market during the coming year, the company could be poised for an explosive period of growth. Figures were converted at a rate of 0.611 pounds to the dollar
