Is it too late to buy this high flying ASX fintech stock?

With the Bravura Solutions Ltd (ASX: BVS) share price up nearly 50% since November last year, is it too late to buy this ASX fintech stock?

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Bravura Solutions Ltd (ASX: BVS) is a fintech company that provides mission-critical enterprise software solutions to the wealth management and funds administration industry.

The Bravura share price is up by an impressive 33% over the last 12 months. After losing some ground over the past year to late last November, Bravura shares have since rallied strongly.

The company primarily operates in Australia, New Zealand, the United Kingdom, and South Africa, with an impressive blue-chip client list including Mercer, JPMorgan, Prudential, and Citi.

Bravura has two operating segments: wealth management and funds administration. The company owns a number of software solutions for a range of financial products such as wrap platforms, superannuation, pension products, life insurance, investment products, and portfolio administration.

Strong underlying business model

Bravura's clients typically sign long-term contracts, up to 10 years, due to high switching costs. This, in turn, provides Bravura with solid future revenue streams.

The company's flagship offering, Sonata, is a next-generation wealth management administration platform that allows users to engage with their clients through a range of devices. The platform supports a wide range of financial products and related processes in a number of geographies. Demand for Sonata continues to grow very strongly.

Strong recent financials

Bravura has an attractive, capital-light business model, with a strong balance sheet.

The company's most recent financial results were very solid and showed further impressive growth.

In FY19, Bravura's overall revenue increased 16% to $257.7 million, EBITDA increased 27% to $49.1 million and NPAT increased 21% to A$32.8 million.

Group EBITDA margin increased impressively from 17.4% in FY18 to 19.0% in FY19, while earnings per share (EPS) increased 19% to 15 cents per share. With regards to its divisions, Wealth Management FY19 revenue increased 14%, while Funds Administration FY19 revenue increased 22%.

Sonata continued to deliver strong revenue growth and now makes up almost all of the company's Wealth Management segment.  A number of clients successfully went into production and additional projects for new and existing clients commenced.

As at 30 June 2019, Bravura was in a very solid financial position with net cash of $194.8 million.

Bravura has a strong sales pipeline across its key markets and geographic regions. This is being driven by sales opportunities from new clients and significant project activity from existing clients.

Recent acquisition adds further depth

In October 2019, Bravura acquired FinoComp for A$25 million. FinoComp's software adds functionality to Bravura and brings new Wealth Management clients as well as cross-sell opportunities to Bravura's existing clients.

FinoComp has exhibited strong revenue growth since it was founded in 2015. Revenue grew by 27% from FY18 to FY19 and is expected to continue to grow at this rate for the next 3 years from a forecast of $6.8m in FY20.

Foolish takeaway

Despite strong recent growth, I don't think it's too late to buy shares in this fast-growing ASX fintech company. There appear to be very strong opportunities for Bravura to continue to grow over the next decade, which could lead to further strong share price growth.

Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd. The Motley Fool Australia has recommended Bravura Solutions Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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