When Sonaecom, parent group of WeDo published their FY2007 results, it made me wonder who really is the biggest revenue assurance vendor in the marketplace. This is no easy question to determine the answer to. To make the task simpler, I reduced the shortlist to just the two vendors who make the biggest claims. In one corner, we have WeDo. WeDo describes themselves as “the world’s revenue assurance leader”. In the other corner, we have Subex. I am sure many will remember how SubexAzure (as was) once emblazoned their logo over a full-size racing car to make the point that they were number 1. Since then, the marketing claims for Subex have changed less than their name. According to their press kit, Subex “ranks as the world’s number 1 provider of fraud management and revenue assurance solutions”. Okay, so WeDo is the world’s leader, and Subex is the world’s number 1. But who sells most? Straight away, you will have noticed that Subex listed fraud and revenue assurance, but that is only the start of my problems when comparing the two. Subex, by acquiring Syndesis, now earns very significant revenues from activation in addition to its RA and fraud products. To understand WeDo’s results, I need to look at Sonaecom’s group results, but results for WeDo are aggregated into totals that include Sonaecom’s other Software and Systems Information (SSI) businesses. So who really does make the most money from revenue assurance?
In the end, the conclusion was that Subex is the bigger earner of revenue assurance revenues. If we start by analyzing Sonaecom’s SSI results, we see that nearly 40% of the SSI revenues relate to equipment sales. This must relate to Sonaecom’s Bizdirect venture which resells IT equipment and software. The remainder, described as “service revenues” must be the total of revenues from WeDo and Sonaecom’s Mainroad IT consultancy. SSI Service revenues in the last financial year were worth 47m euros (US$72.2m), which sets an upper limit on how much WeDo can be making from revenue assurance. Turning to Subex, we need to estimate how much of their revenues relate to RA and how much to service activation. It used to be easier to identify the separate revenue streams, but more recent shareholder advice blurs which is which. Other than that, I think it is fair to include fraud detection and other products under the heading of revenue assurance; WeDo also offer products that fall outside of the traditional “core” of revenue assurance. Looking at Subex’s Q3 results, the company still looks on course to break 5bn Indian rupees for annual revenue i.e. to roughly meet the $US130m revenue targets, as stated in their guidance. That guidance also advises that ex-Syndesis will represent just over 30% of the total income, meaning that revenue assurance and fraud products will account for US$90m if targets are met. Unless the ratio of RA income to service activation income has changed significantly, then at Q3 Subex would have already generated over US$60m revenues from RA, with still a full quarter left to go to meet the US$90m target. This puts Subex comfortably ahead of WeDo, and makes Subex the worldwide biggest earner of revenue from revenue assurance products and services.
