Company of the Month December 2017: First Derivatives

Pictured: Brian Conlon

The Newry-based software and consultancy group with a global footprint is Company of the Month for December 2017. 

First Derivatives is a Newry-based software and consultancy group, developer and provider of database technology to some of the world’s largest finance, technology and energy institutions. They design, develop, implement, and support a range of data and trading systems for front, middle, and back-office operations worldwide

In December it was reported that the Newry company is to purchase Spanish company Telconomics, a privately-owned provider of telco analytics software, in a deal worth up to €2.5m. The initial consideration for the acquisition is €900,000, of which €400,000 is payable in cash and the balance in 12,199 new ordinary shares in First Derivatives.

A deferred consideration of up to €1.6m is payable depending on certain performance targets being met over the next three years. In the year to December 31, 2016, Telconomics generated revenue of €800,000 and earnings of €300,000.

Based in Madrid, Telconomics was founded in 2009 to provide analytics consulting for telecommunication network operators.

Telconomics founders Alfonso Campo, Javier Lazaro and Juan Blazquez will stay with the business.

The deal is expected to immediately become earnings-enhancing as Telconomics’ INTEF software product is subsumed into First Derivatives’ own Kx Telco Solutions suite.

Speaking in December, Brian Conlon, CEO, said: “Telco is one of our key target verticals and we believe that this acquisition will help turbo charge our growth in this area. The products, domain expertise and customer contacts provided by Telconomics, supplemented by our data science, machine learning and engineering resources, provide the opportunity for significant returns.”

First Derivatives received a lot of favourable attention from markets analysts towards the end of 2017, following a substantial price increase on the AIM, and profit expected to grow by 96.39% over the next couple of years.

Brian Conlon, founder of First Derivatives, spent the end of the 1980s at the US derivatives trading desk at Morgan Stanley in London. He then moved on to become a financial engineer for Sunguard, travelling regularly between Silicon Valley and European hubs.

He eventually set up his company from home in 1996 and grew into an international concern with staff embedded in major banks in all the global financial centres from Hong Kong to San Francisco, working side-by-side with the banks staff, providing expert risk management skills. As Irish banks resisted change in the era, he only won his first Irish contract in 2007. Alongside the consultancy services, Conlon diversified into writing his own software. Another interesting move was purchasing apartments to house employees working in New York and London.

First Derivatives now employs over 2,000 employees worldwide and is one of the biggest graduate recruiters in Ireland. Clients include Bank of America Merrill Lynch, Airbus, Morgan Stanley, JP Morgan and HSBC.