February 9, 2010 / 3:45 PM / 9 years ago

UPDATE 2-RiskMetrics Q4 profit narrowly beats estimates

* Q4 adj. EPS $0.11 vs est. $0.10

* Q4 rev up about 1 pct * Sees 2010 rev $315 mln-$325 mln

* Says to focus more on risk segment

* Says may look for acquisitions in the risk space (Adds details, CEO comments)

By Supantha Mukherjee

BANGALORE, Feb 9 (Reuters) - Risk advisory firm RiskMetrics Group Inc RISK.N posted a fourth-quarter profit that narrowly beat analysts’ expectations, helped by higher renewal rates at its risk management business.

“The upward trend in renewal rate is expected to continue into 2010 as we have now completed a full renewal cycle effected by the financial crisis,” Chief Executive Ethan Berman said.

Berman told Reuters that the renewal rates may go up to 2008 levels by the end of this year.

The company, which saw a 2 percent drop in revenue at its risk management business in the fourth quarter, said it plans to focus more on the segment as it expects a bigger budget allocation from its clients in the risk space.

“We think risk will become an increasing percentage of our revenue in 2010, and we expect it to be a faster growing segment than governance,” Berman said.

The company will also explore opportunities for acquisition in the risk space to strengthen its position, he added.

Last year, the company acquired KLD Research & Analytics and Innovest Strategic Value Advisors Inc, which together added $6.7 million to revenue in 2009.

However, Berman declined to comment on news reports that the company had put itself up for sale and that it had spoken to potential bidders.

RiskMetrics, which was spun off from JPMorgan Chase (JPM.N) in 1998, supplies data, analytics, risk reporting, and other information services.

It also offers corporate-governance advice to large investors through Institutional Shareholder Services (ISS), which it acquired in January 2007.

The company got a major boost with its famous “4:15 report,” which was delivered to clients after market close on every business day, assessing the risk element of their investments.


For 2010, RiskMetrics expects revenue of $315 million to $325 million, while analysts are expecting $316.8 million.

Contract value, a key metric that fell on an annualized basis, suggesting that the operating environment for the company has not fully eased, may also get better.

“We do expect annualized contract value to go up in the first quarter and continue to rise in 2010,” Berman said.

For the latest quarter, the company reported net income of $7.6 million, or 11 cents a share, compared with a loss of $149.1 million, or $2.43 a share, a year earlier.

Total revenue rose by about 1 percent to $76.5 million.

Analysts on average had expected the company to earn 10 cents a share on revenue of $75.5 million, according to Thomson Reuters I/B/E/S.

Shares of the company were trading almost flat at $17.47 in morning trade on the New York Stock Exchange. (Reporting by Supantha Mukherjee in Bangalore; Editing by Anil D’Silva)

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