In the early 1980s, when Stephanie DiMarco was working as a portfolio
manager at Bank of America, she saw many opportunities to make an analyst’s
job much easier. So in 1983, she started
Advent Software , which is
now the leading software developer for the investment management community.
The product line is quite extensive. Axys and Geneva allow for advanced
portfolio management. The Advent Partner product helps with complex tax
layering and partnership accounting. Moxy is geared for trading and order
management. Then there is Qube, which is an enterprise-wide client
relationship management system. Advent Browser Reporter helps distribute
reports over the Web and Rex allows for Web-based reconciliation.
During the past quarter, revenues were $34.1 million, which was up from $27
million in the same period a year ago. Although, net income surged 42% to
$7.1 million. Then again, the company was able to boost operating margins
from 23.6% to 26.2%.
Of course, the Internet will be a driving force for Advent. For example,
the company plans to launch the ambitious Advent TrustedNetwork. In
essence, the product allows financial institutions to get
cross-institutional, consolidated views of client portfolios – straight from
the Net. After all, most investors maintain multiple accounts, which may
include brokerage accounts, IRAs, 401(k)s, bank accounts and so on. Thus,
with TrustedNetwork, financial advisors can give much better advice — as a
client’s complete financial status will be in plain view. In a way, the
TrustedNetwork will be a critical piece of infrastructure for financial
institutions.
But there are definite risks with Advent. First of all, the company does
have a premium valuation. Currently, the PE ratio is 91 and the market cap
is $1.9 billion.
Also, the financial services industry is subject to tremendous volatility.
But, ironically enough, this may be a benefit for Advent. How? The
hyper-fast growth of assets under management is slowing for financial
institutions. In other words, there will be demand for tools to reduce
costs. In fact, there was a clear hint of this from Janus Capital this
week. According to an internal memo, the company is taking steps to use the
Internet to reduce its cost structures, as the firm expects top-line growth
to flatten.
Actually, expect more announcements like this — and, most likely, more
business for Advent.
