Tuesday, 30 September 2008

First thoughts: Harvey Nash, Misys

While top-line growth for both players looked encouraging (see RNS for Harvey Nash here and Misys here), as ever, the devil is in the detail.

Harvey Nash saw 39% revenue growth in 1H09 including acquisitions, with net fee income (NFI) up 24%, reflecting a 200bps gross margin hit yoy. A clamp-down on SG&A limited the operating margin hit to around 20bps (2.2%). Chairman Ian Kirkpatrick reported increased outsourcing demand driving growth with “mixed” market conditions on the core recruitment side of the business. Pipeline visibility is low and the company expects to drive growth both organically and acquisitively. We will be speaking with CEO Albert Ellis later this morning.

For Misys' 1Q09 trading update, it was services which seemed to save the day. Total revenues grew in both of Misys’ financial services divisions (Banking, Treasury & Capital Markets) though were flat (like-for-like) in Healthcare, pending the Allscripts 'merger' (now fully funded again as of yesterday). However, new licence revenues fell in TCM and Healthcare. CEO Mike Lawrie seemed “confident” about the rest of the year – but I guess they wrote that part of the release before yesterday’s news! I’m about to tune into the concall and will advise more later.

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