Investors expected a particularly strong second quarter for Advent Software (NASDAQ:ADVS), which develops applications for the investment management business. But the company failed to hit the optimistic expectations, and the stock plunged 12% after the earnings release last week. Yet the fact remains, Advent is still growing its business at a decent clip.

In the second quarter, revenues increased 8.4% to $44.4 million (which is a company record). Net income was $1.6 million or $0.05 per share, which was down from $3.9 million, or $0.13 per share in the same period a year ago. However, Advent expensed its stock options, which accounted for $3.5 million. Backing this out, the earnings per share figure was $0.13.

Advent develops software primarily for investment firms, such as mutual funds, hedge funds, family offices, banks, and trusts. The software helps with such things as reporting, accounting, trading, and order management.

However, it is not uncommon for investment management firms to rely on internally developed or even spreadsheet-based systems to manage workflows. But, with increased regulation -- as well as the complexity of new investment vehicles -- the industry is moving toward third-party solutions like Advent's.

The company's extensive customer base, which includes over 4,500 names, is a definite competetive advantage. It is a sterling list, with the likes of Goldman Sachs (NYSE:GS), Lehman Brothers (NYSE:LEH), Citigroup (NYSE:C), and Merrill Lynch (NYSE:MER). With this large base, Advent has the opportunity to up-sell and cross-sell new product offerings. In fact, over the past few years, the company has had a strong product pipeline.

But there are headwinds in the form of fierce, deep-pocketed competition. Some of the biggies include Schwab (NASDAQ:SCHW), SunGard, and Thomson.

Looking forward, Advent projects revenues of $44 million to $46 million in the third quarter, with full-year guidance of $180 million to $185 million. Again, this is decent growth -- but it apparently isn't enough to calm investors worried about too-high expectations and tough competition.

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Fool contributor Tom Taulli does not own shares of companies mentioned in this article.