viewRosslyn Data Technologies PLC

Rosslyn Data looking to scale-up and leverage its RAPid platform

The company is developing a Human Resources analytics product suite using the core technologies from its other applications

Big Data
Rosslyn wants to reduce reliance on big contracts that have long sales cycles

Rosslyn Data Technologies PLC (LON:RDT) creates ‘analytics ready’ data for world leading enterprises.

Its patented technology cleanses, enriches and analyses data on a single cloud platform: RAPid.

RAPid enables the resolution of one of the biggest issues affecting global enterprise today, namely the exponential growth of unreliable, complex data.

Acquisition of Integritie doubles the size of the business

Since its full-year results were announced at the end of August 2017, things have been quiet on the news front, with the company focused on integrating its April acquisition of rival data miner, Integritie, for £2.59mln.

Integritie’s speciality is analysing unstructured data and this will be an important add-on for Rosslyn according to chief executive Roger Bullen.

“The customer base is complementary to our own and the acquisition will enable us to cross-sell both structured and unstructured data services to an enlarged customer base,” Bullen said.

READ Rosslyn Data snaps up rival in bold move

Another key attraction, Rosslyn said, is that it will reduce the reliance on large contracts with long sales cycles in its core data mining business, something that has led to uneven sales over the past three years.

The deal will generate a substantial increase in Rosslyn's recurring revenues, Bullen added, boosting the quality of earnings and reducing overall risk from the ‘reliance on the sale of cumbersome revenue items, the timing of which is always difficult to predict’.

In its acquisition announcement, the company conceded that something needed to be done to bring to an end an extended period of negative cash flow that has put pressure on its balance sheet.

The directors believe that additional data streams and applications are needed to bring the group to critical mass, and the board's strategy is to accelerate the development of the group both organically and inorganically.

In other words, the Integritie acquisition, which doubled the size of the business, may not be the last.

The aim is to add sales-focused companies to the group that can make use of the Rosslyn platform​

The directors believe that a significant consolidation opportunity exists for Rosslyn to acquire companies that are heavily geared towards sale and delivery and that could leverage the Rosslyn platform.

Integritie made a loss of £2.4mln in 2015 on sales of £3mln, but costs savings from merging the two companies are forecast at £0.8mln within the first year of ownership.

As for Rosslyn, the year to the end of April saw the group narrow its loss and express confidence over its prospects in the current year after securing a broad pipeline of new business.

The data mining specialist reported a loss before tax of £0.4mln, compared to a £2.4mln loss the previous year, thanks to tight cost controls.

Revenue dipped to £3.6mln from £3.9mln last year as the Brexit vote, US presidential election and difficult trading conditions for some of its partners led to a slowdown in the delivery of some larger contracts.

“We are now able to see a timeline when cash flow break-even and profitability occur; although we are not yet complete, we believe there is a strong chance of this occurring this new financial year,” said chairman John O’Hara.

Cash flows used in operating activities fell to £1.6mln from £2.8mln and the group ended the year with a net cash balance of £0.3mln, down from £1.9mln, but the company said it has adequate cash resources to take the group through to break-even and cash generation following a share placement in May.

With a larger sales team on board, and cross-selling opportunities to pursue, it is easy to understand the board’s guarded optimism.

Navigating through the data jungle - with a smaller IT department​

The company is the product of an era when information technology teams are shrinking yet the demand for meaningful commercial information has never been greater.

This has led to a shift in data analysis with the departments, country offices and divisions of big firms carrying out their own number crunching rather than it being done centrally.

By extension, this means the process is being overseen by workers unfamiliar with the technology and coding needed to extract the data required of their particular part of the business.

Rosslyn has five interlocking technologies that make it easy for the lay user to do just that, and that is the core of the RAPid data analytics platform.

For example, one partner is using Rosslyn’s technology to deliver 11 client projects analysing more than £38bn (€50bn) of transactions.

“Our continued development of the partner channel is exciting and is seeing the RAPid platform being progressively embedded in a number of organisations and I expect this list to increase. These partnerships play an important role in closing the gap between the firm and the market place enabling us to grab market share far easier than through the direct channels,” Bullen told investors in August.

Quick facts: Rosslyn Data Technologies PLC

Price: 5.59 GBX

Market: AIM
Market Cap: £18.95 m

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Investor Update: Rosslyn Data Technologies grows revenues and generates cash

Top stories from the Proactive Investors UK newsroom: Rosslyn Data Technologies PLC (LON:RDT) cut its operating losses by 75% in the last financial year, while also turning cash generative and, according to the company, is well-positioned in the current year. In a trading update ahead of...

on 29/5/19

4 min read