Revenues forecast to climb 350% in 2019
After a relatively quiet 4 months, volatility in the capital markets has returned with a vengeance. Sending equity/crude prices lower on global growth fears and investors scrambling for ‘safe haven assets’ (eg sovereign debt).That said, the turbulence has been a godsend for traders who make money on dealing volumes, but equally a real headache for compliance teams who are desperately trying to keep tabs on risk positions. Unfortunately many banks, hedge funds, stockbrokers et al, currently use spreadsheets or bespoke systems to monitor these real-time exposures, which typically do not communicate with each other.
KRM22 is fixing this problem with the intention of becoming the de facto standard for RiskTech SaaS solutions across the world’s exchange traded and OTC securities. Sure there is still a lot of hard work to do, yet so far progress has been little short of miraculous. In the space of 13 months since IPO, the firm has completed 4 acquisitions, signed 4 strategic partnerships, won numerous new contracts, built an expert subject matter team and launched of a ‘1st of its kind’ Global Risk Platform.
The upshot being that today Annualised Recurring Revenues (ARR) have mushroomed to £3.9m vs zero just 1 year ago. Chairman & CEO Keith Todd adding “We have made good progress in a short period, and we have a very strong sales pipeline which includes many cross-selling opportunities.â€
In terms of the numbers, we believe 2019 turnover will jump by 350% to £5.8m (LY £1.23m) with ARR closing at £6.67m. Better still, thanks favourable operating leverage, targeted sales & marketing and a buoyant pipeline, ARR is forecast to close Dec’20 at £10.7m (+60%) and further rise by 40%+ pa in 2021 to £15.0m. In turn, pushing 2021 EBITDA (pre SBPs) to £1.55m, with the business being self-financing from 2022 onwards.
Ok, so how much is the stock worth? Well using a 20% discount rate and peer group multiples, we value KRM22 at 110p/share - offering risk tolerant investors >45% upside vs today’s price.
KRM22 PLC. KRM22 plc is a United Kingdom-based closed-ended investment company. The Company's objective is creating value for its investors through the acquisition of or investment in and subsequent growth and development of target in the technology and software sector. The Company may invest or acquire globally, including emerging markets, and its short-term focus is on the United Kingdom, Europe, North America and Asia.
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