• Portfolio of risk management products for capital market firms
• Applications cover market, regulatory, technology and operations risk
• Products also cover hedge funds, financial institutions and traders
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 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+
Speaking to Proactive in March, KRM22’s chairman and chief executive Keith Todd said the business was now “up and running” with 27 customers and a team of 80 people worldwide.
Looking into the new year, Todd said the company had “a big agenda for 2019”.
“This is where we put the accelerator on … partnerships, product releases, we’ll also be driving customer growth...We’ve got a very big organic growth agenda while we build our global risk platform.”
For investors, Todd says KRM22 is a software-as-a-service (SaaS) business, and “that means recurring revenue … building an annuity of relationships with customers so you get good, predictable cash flow and you build your customer base.”
“The SaaS model is very powerful for investors. Recurring revenue, more profitable and higher margin in the long-term.”
Todd adds that going forward, the company will be prioritising communication to ensure that the KRM22 business model is “understood by investors”.
What the broker says
In an initiation note, analysts at 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 said they expected the company to achieve run rate positive cash generation and profitability during its 2020 financial year.
With shares trading around 75.5p as of 3 June 2019, KRM22 has a market cap of £13.8mln.
CEO Interview - Keith Todd