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 a trading update, KRM22 said the year to 31 December booked revenue of £4mln, up from £1.3mln a year ago.
Annual recurring revenue (ARR) was £4.5mln, up from £3.3mln in 2019, representing organic growth of 18%.
Looking ahead, KRM says it has a “strong pipeline of prospects” for the new year, including deals already agreed but in the process of being contracted.
Its “strong sales pipeline” coupled with cost reduction measures taken in 2019 meant it is now “on track to be adjusted EBITDA profitable and cash flow positive in 2020”.
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.
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.
What the boss says: Keith Todd, chairman and chief executive
"In the last twelve months we have seen KRM22 making significant progress."
"The 'Global Risk Platform', which is the central pillar of our strategy, is live and provides access to multiple offerings including our Enterprise Risk Cockpit, Market Risk and Regulatory risk suite. We are confident that we are on course in 2020 to deliver on our commitments."