Cloud computing and connectivity provider for financial markets Beeks Financial Cloud Group (“Beeks”) has reported FY 2019A results in line with our forecasts. Contract wins in the key institutional business demonstrate that the group is delivering against the stated strategic priority of customer growth and also show the benefits of the ongoing investment in the Beeks platform. Management commentary on the outlook is positive, and our FY 2020E earnings estimates are unchanged following the announcement. In this note we also introduce FY 2021E estimates for the first time.
FY 2019A Revenue of £7.4m (+32%) and underlying EBITDA of £2.5m (+27%) were in line with our forecasts. With 32% YoY growth in Annualised Committed Monthly Recurring Revenues (“ACMRR”) to £9.1m, revenue visibility remains high.
Beeks’ primary strategic objective is to grow the institutional customer base, particularly with Tier-1 clients. In our view the 2019A results demonstrate solid delivery against that priority. Contracts with three new Tier-1 clients were signed during the year; a global investment management organisation and a global bank were announced in July 2019 following on from the insurance sector client announced in December 2018. The institutional business (90% of turnover FY 2019A) saw material customer growth overall, with 28 new customers added during the year.
FY 2019A saw the Beeks platform expand into a second Equinix New York data centre, and also the first revenues from the two newest data centres, London Interxion and Singapore. Both are on track to reach monthly breakeven within the group’s target 12-month period. The Beeks footprint now extends to 11 data centres in key financial centres across the world, with over 200 pre-built connections to trading venues. We believe the benefits of this investment are already being felt – Beeks’ expansion into new territories and asset classes has been a key driver of the customer growth - and Tier-1 client wins - discussed above.
Beeks has enjoyed “a good level of trading” in the first two months of FY 2020E, with continuing growth in both the mid-tier and larger institutional client bases. The market backdrop for Infrastructure as a Service (IaaS) remains favourable, with management expressing confidence that additional Tier-1 customers will be secured during the current financial year.