Beeks Financial Cloud Group (“Beeks”) provides scalable, cloudbased ultra-low latency connectivity and infrastructure services for the automated trading of all key financial asset classes. Founded in 2010, in our view the business has a strong track record of growth and profitability and enjoys a solid financial position with high levels of recurring revenue and positive monthly cash generation. This has all been delivered while investing in the platform - the benefits of which have been demonstrated in the impressive revenue growth reported over recent periods. The experienced management team has positioned the Group well to benefit from the growth in its chosen markets.
In our view Beeks has a strong track record of growth and profits. The group has delivered revenue growth in each year since inception in 2010 and has been profitable since trading commenced. We believe the company has made a strong start to life on public markets post the November 2017 listing on AIM. Beeks reported H1 2019A revenue growth of 36% YoY, primarily driven by a 46% increase in institutional revenues. This was accompanied by 49% improvement in EBITDA during the period, the increase a function of previous investments in capacity becoming revenue generating.
Almost all of Beeks’ revenues are generated on an ongoing contract basis. Visibility is therefore good. Beeks generated net cash from operating activities of £646k H1 2019A, so is cash generative, and based upon our forecasts, expected to remain so. With a £1.8m net cash position (H1 2019A), the group has a solid financial position.
The group has announced a maiden 0.3p FY 2018A dividend and 0.2p H1 2019A. We believe this represents a sign of management’s confidence in the outlook for the business.
Beeks continues to invest in the platform. Although this spend has an impact on near-term cash flow, we believe the outlay to be strategically sensible given the resulting improvement to competitive positioning and the favourable industry growth backdrop. The benefits of the ongoing investment are being amply demonstrated in the impressive revenue growth reported by the group over recent periods (+36% YoY H1 2019A) and the signing of the group’s first Tier 1 institutional client, but also via low customer churn levels.