What KRM22 does
The group’s portfolio of applications covers market, regulatory, technology and operations risk.
What it owns
The company currently owns:
• Irisium – provides analytics and contextual surveillance tools that help capital market firms identify and manage risks of market abuse, fraud and operational issues as well as meet regulatory compliance
• ProOpticus – a real-time, multi-asset class, post-trade portfolio risk management system for hedge funds, financial institutions and traders. The system provides analysis from the micro to macro levels of granularity
• Object+ - a risk management and post-trade services firm focused on capital markets
- The company in May unveiled a partnership with compliance services group Trailight Ltd to distribute and support compliance products on its Global Risk Platform
- KRM22 acquired Dutch-based risk management and post-trade services group Object+ for around £3mln
- In its final results for 2018, the firm reported £1.3mln of revenue in 2018 from a standing start while annualised recurring revenues at the end of the financial year was at £3.3mln, which has since risen to £3.9mln following the completion of the acquisition of Object+
- In October, the firm signed up three new customers for its risk management software, boosting its annual recurring revenues to £4.3mln, and landed its first “significant” customer for a real-time enterprise risk management product launched earlier this year
- Looking ahead, KRM said it expects the market to be “more stable” following the “anticipated resolution of political uncertainties surrounding Brexit”, however until then discussions with strategic investors and decisions around acquisitions will be delayed until 2020
How it is doing
In the first six months of the year, KRM22 booked revenue of £1.8mln, up from £0.1mln a year ago.
At the end of June it had £4.1mln of annual recurring revenue (ARR) from 37 institutional customers, compared to £3.3mln and 26 institutions a year ago.
After an operating loss of £4.4mln, there was cash and equivalents of £1.4mln in the bank at the end of the period.
KRM22 said its sales pipeline has risen to a value of £1.5mln, which is expected to close by the end of the year.
What the broker says
Analysts at KRM's house broker finnCap said the company is “well placed” to consolidate a fragmented risk management market, adding that the firm's management had a track record that excelled in the technology, software and financial sectors, and that the board’s expertise was “core” to the business and its investment value.
finnCap added that the company’s 2018 results demonstrated that the establishment of its Global Risk Management platform, which combines multiple software applications into one place, alongside initial products and revenue would advance the group’s ambitions going forward.
Analysts reiterated their 100p target price for the group, saying that the new client wins will result in “consequently positive” effects on the firm’s 2020 earnings (EBITDA) and an improvement in its cash expectations.
With shares trading around 75.5p as of 3 June 2019, KRM22 has a market cap of £13.8mln.
What the boss says: Keith Todd, chairman and chief executive
"We have done five partnerships, three in the first half and two since."
"There is a very very healthy pipeline, you know, £1.5mln of annual recurring revenue... a very substantive number."