It’s reassuring that both Paul and Justin say the HFT issue at NASDAQ is nothing to do with Beeks.
However it’s interesting that neither of them mention the issue of Beeks removing the NASDAQ news updates from the website and other social media.
That’s why investors put one and one together and panic sold.
Here’s hoping for a positive update on Monday and hopefully some clarity from the company during the IM broadcast on Wednesday. |
Paul Scott confident the Nasdaq high speed trading issue has nothing to do with Beeks. Starts @41.00 |
A new contract announced along side the results would be very nice. |
Profit taking ahead of results perhaps. After an unexciting trading update people may be worried that the results may not live up to inflated expectations. I think there is a risk of that. Also I've seen several decent companies drop even after good results recently. Hyperbole isn't Beeks or GMcA's style but consistent delivery is. I'll be happy with steady revenue growth against improving margins & a positive outlook on pipeline. With so much focus on Exchange cloud it would be nice to hear that the rest of the business continues to progress. |
IMHO its a tree shake ahead on half yr numbers on Mon. |
mmm wonder what triggered the sudden drop ,,,,,,,, |
Do you have a basis for asserting that Exchange cloud does not transfer ownership of equipment to the exchange? While the service offers monthly charges to traders, the Exchange could own the kit to do that, with Beeks charging up-front for the kit & then monthly for its software, support etc. Beeks clearly said that there were significant up-front charges for Exchange cloud and also that revenue recognition starts before the service goes live, so I feel the financial model may be different from their conventional services. |
No offense taken Trombone - hogwash or not Mr Market ain't offering you BKS shares at 116p. So, what are you going to do? |
Felix 10% is profit after tax once they have a more normal 20-25% tax charge in the future so quite similar to pbt margins they are posting today
Exchange cloud is still rental of equipment so still has the depreciation
No offense Maddox but 'vibes' are not a valid way of valuing a company. That's bull market hogwash and this aint a bull market now |
Hi Trombone,
My medium term share price target is 524p. My valuation metric is that this is a unique offering in a very large market of potential clients with very deep pockets.
I'd suggest your valuation of £75m and c. 116p per share is very much the floor rather than a ceiling - and good luck acquiring a holding. |
BKS would be very unwise to comment on this issue especially as it has nothing whatsoever to do with them. Nasdaq is a hugely important client that it would be stupid to upset. |
You are correct that depreciation has been a significant factor in Beeks results. In FY24 GM was 40%, EBITDA margin 38% while PBT/revenue was just 14%, though still above the 10% you suggest. The H1 trading update flagged a 22% rise in interim revenue but a 30% rise in PBT, which suggests that the improved margins Beeks promised are starting to deliver. My FY estimates suggest GM around 42% and PBT/revenue in the high teens. I also think that the financial model may have changed. Beeks referred to significant up front payments for Exchange cloud. I think therefore that for Exchange cloud (and Private cloud) they may sell the kit to the client, removing the depreciation factor. Does anybody have views/info on this? |
I wasn't commenting on the justification for the preceding rise in Beeks price. Only that the FT article was not a good reason to reduce the price significantly over the last couple of days. I agree the price rise over the last year was largely due to the Nasdaq contract announcement, but also a recognition of the potential sales of Exchange cloud, given Beeks statements on pipeline, the compelling business case and lack of competition. Also earlier messages from Beeks that margins will rise with revenue against a fairly fixed cost base from here on. Bear in mind that they were growing revenue at >20% before Exchange Cloud existed. Yes the absence of POD news from Nasdaq does add a little risk around that contract, but to my mind the fibre issue explains that delay and so reduces that risk slightly. |
>>Where does it confirm they offering POD for free until June?>>
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@felix1
- Where do NASDAQ refer to POD on their website? I couldn't see anything?
- Where does it confirm they offering POD for free until June?
I disagree on the fall being unjustified as there is significant uncertainty on the commercial implementation of the contract. Further, shares rose from 97p to over £3 mainly on NASDAQ hype. One major source of hype being that there was nothing in the FY25 forecasts for NASDAQ and hence a further upgrade was highly likely.
It's much healthier if the share price rises on actual revenue / PBT upgrades vs hype on what might happen... |
2 pointsMost companies and brokers won't want to comment on anything so close to resultsAnd also, the Nasdaq tie up launch has been badly done. I don't think that's Beeks fault but hopefully the results shed more light than we've had to date |
After reading all the comments, links to several articles notes and assumptions by my fellow board members, I have concluded that without an immediate RNS from the Company clarifying the current situation together with the slide in the share price, we will simply have to wait until Monday,sEarnings Report |
Thanks for your judicious insight felix1. I concur with your view that the "fall in Beeks price is unjustified, based on a misconception." |
 I’ve been reluctant to share my views on here after a previous incident, but as others have done good work to reach similar conclusions I thought I’d add my support to them:
1) The Nasdaq issue covered by the FT was in providing faster hollow-core fibre to select high-frequency (HFT) traders in the original NY11 proximity datacentre. That is a significant crime, especially as they failed to declare it to the SEC.
2) That might explain why Nasdaq have yet to issue a regulatory note on Beeks POD pricing, as it might have further aggravated the SEC that they were pressing ahead with other developments in proximity services before rectifying the fibre issue.
3) Beeks do not support HFT, which requires specialist dedicated kit, and their equipment in any case is going into the new datacentre NY11-4.
4) That Nasdaq now refer to POD on their website is positive, though it is not very visible, probably due to 2 above.
5) Offering POD for free until June is extraordinary and might indicate that they had committed to provide POD for some users by the end of Feb, but cannot charge until they have issued pricing. That’s a nice promotion for Beeks though and sets a timescale during which we should expect to see the regulatory pricing issued.
6) The fall in Beeks price is therefore unjustified, based on a misconception. The only impact might be a delay in the start of services, but 5 appears to address that. I’m therefore treating it as a nice buying opportunity ahead of results. |
Hmm. Well they commented to Justin Waite, who said "I've been in contact with Gordon, the CEO of Beeks, and he says it's an old colocation legacy offering ... [which has] nothing to do with us".
from 4:25 |
I approached BKS this morning to seek some clarification whether the reported Nasdaq high speed trading issue had any connection or relevance to their contractual relationship with Beeks. I recived the following response from their PR agency.
"Thanks for your email to Beeks Financial Cloud. The Company does not comment on share price movements or unsubstantiated rumours. As previously announced, Interim Results will be released on Monday 17th March, with an Investor Meet Company presentation on 19th. You can register to join here:
Clearly we will have to wait for both the interim results and the investor presentation next week for any reference to this issue. I would imagine that the regularatory situation currently relating to Nasdaq is unlikely to impact the BKS contract otherwise they should have made some kind of announcement as a potential material issue that could have an impact on future trading prospects. |
Trombone, you clearly know more than the broker - Canaccord raises price target from 260p to 325p, you suggest 112p / 75m.
Our addressable market is extensive with up to 21,000 banks and hundreds of global exchanges, a large percentage of which maintain their own IT infrastructure and are yet to move to the Cloud computing model. |
BKS is NOT Google et al |
Some commentary from Paul Scott, who says he's contacted BKS's advisers to request clarification.
from 15:45 |
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