Beeks Financial Cloud Share Discussion Threads

[masurenguy] 11/3/2018 10:28

G - thanks very much for your excellent and succinct feedback following your visit to the company. It is much appreciated especially since they are physically less accessible to us Sassenachs located a long way south of the border.

Did you obtain any insight into their competitive environment or is this so fragmented that it really does not appear on their radar?

[glasshalfull] 11/3/2018 08:57

Beeks Financial Cloud

Site visit

I visited Beeks (BKS) Glasgow HQ & also Network Operations Centre (NOC) on Friday (09.03.2018) as it’s located fairly close to me. Ideal opportunity & great timing as it was a fortnight after release of their interims (to 31.12.2017). Should make mention that I thought it impressive that their interims had been released so quickly, only 7-weeks after the period end. Quite a few companies could learn from this.

The visit allowed me to get a better feel for their proposition & development. It also provided me the opportunity to speak with the wider team of employees. Gordon McArthur (CEO) & Simon Goulding (CFO) were extremely hospitable & welcoming, as were the extended team, allowing me to view the main critical trading infrastructure operation in monitoring the impact of the US Non-Farm Payrolls where markets experience a considerable spike each month following release of the numbers. No issues encountered with systems coping admirably. I observed that the demand went up 6/7-fold (to my untrained eye) before normalising.

This is the major market spike event each month & Gordon indicated that this is a predictable event but the NOC team are monitoring from 2200hrs on Sunday evening through to 2200hrs on Friday evening & ensuring access at all times and especially at times of considerable market volatility.

(I’ve placed a couple of snaps on Twitter @glasshalfull1)

Below is a short overview of the company. I don’t plan to prepare a comprehensive one at this time, my preference to wait for release of FY2018 results & their Annual Report later in the year before placing fingers on keyboard.

Irrespective, investors will be pleased to know that Beeks will be attending & presenting at Mello 2018 in Derby so chance for investors to apprise the investment opportunity first hand. I believe the wonderful Tamzin (PI World) may be filming them at Mello, great for investors & prospective investors unable to attend.
I can’t recommend the event highly enough & will be there from the Wednesday evening through to the Friday night.



Background

As previously mentioned my attraction, was drawn to Beeks as they are profitable & exhibit a strong & growing recurring revenue model. They have also signalled that they are looking to establish dividend payments following release of FY2018 results.

Beeks were established in 2011 & their recurring revenue model or Infrastructure as a Service (known as an IaaS model) finds 95% of their customers paying monthly & therefore the company is strongly cash generative & revenue recognition is high.

This model has allowed company to make two acquisitions to date & invest in their infrastructure during 2016 & 2017 to support growth.
They provide a low-latency service for algorithmic or automated trading, providing critical connectivity & server infrastructure for institutional and retail clients. Essentially, this means that they provide over 6,000 retail traders & c.170-180 financial institutions with connectivity for automated trading – FX (80%) & Futures (20%) from 9 data centres around the world.

Algorithmic & automated trading appears a fast growing segment & on speaking with Gordon & Simon, both confirmed there are tens of thousands of financial institutions around the world that could be potential clients. FX and derivatives brokers to hedge funds. Many financial institutions have commenced providing automated trading services to their clients and many utilise automated trading services. In other words, they are only just scratching the surface at the moment.

Beeks came to the market in November 2017 via an IPO at 50p where they raised £3.5m net of expenses. Despite the positive interims released in February the share price is only +10% on the issue price (55.5p). Market cap is £27m & the company had £2.55m net cash at 31.12.2017.

It should also be noted that Major Holders (over 3%) account for 83% of the equity with Gordon McArthur retaining a 61.8% stake.

I would draw anyone interested in the company to their admission document with p7-19 providing an excellent overview of their proposition; the market; why Beeks & competitive landscape.



Results

They released H1 2018 results in February 2018 which confirmed further strong growth & a positive outlook for FY 2018 (30.06.2018).



H1 2018 metrics confirmed: -

*Revenue increased by 40% to £2.57m (H1 2017: £1.83m)

*Good revenue visibility maintained with Annualised Committed Monthly Recurring Revenue up 50% at £5.93m (H1 2017: £3.96m), in line with management expectations

*Gross profit up 62% to £1.20m (H1 2017: £0.74m)

*Gross profit margin 46% (H1 2017: 40%)

*Underlying* EBITDA increased by 92% to £0.63m (H1 2017: £0.33m)

It’s this annualised committed monthly recurring revenue growth that is particularly significant. The IaaS model provides reliability to revenues & immediate payment from the vast majority of clients. As mentioned, 95% pay monthly, so no bad debts & strong cash generation.

As shown during the last few years, the business is highly scalable & will allow margins to grow further. BKS have experienced high growth in their institutional client base which accounts for c. 80% of turnover. Not only are they gaining more clients, but this client base is also delivering an increased spend. The company have a broad spread of clients & no single client provides a dominant proportion of revenue.

This enabled Beeks to report an exit run-rate of monthly committed revenue of £494k at 31.12.2017 or £5.9m annualised.

Year-End Revenue Run Rates

Worth reiterating the year end exit run-rates: -

2014 = £900k

2015 = £1.6m

2016 = £3.4m

H1 2017 = £4m

2017 = £4.7m

H1 2018 = £5.9m

& Cenkos are forecasting: -

2018 (at 30.06.2018) = £7.2m

2019 = £9.8m

Cenkos noted that CAGR between 2014-2019 will be c.65% if they deliver as per forecasts & the CAGR of adj EPS between 2016-2019 would therefore be over 76% placing Beeks on a PEG of 0.2

The Future

H1 2018 results confirmed a positive outlook for the full year with a continuation of revenue growth. While they are focusing in growth opportunities in Asia there is also an opportunity for them to offer further services to existing & prospective clients through additional levels of security (DDoS) protection (worth Googling DDoS attacks) & also the development of back-up services to clients.

Importantly, the infrastructure investment they undertook in 2016/17 currently provides them with 6 racks of unused capacity on their platform which is spread over various data centres. Each unused rack is currently capable of generating an average of £38,000 per month of recurring revenue, or in total around £3m of annualised revenue with little additional cost.

I would envisage that the company will continue to focus on acceleration of organic growth by growing the client base while supplementing this with small bolt-on acquisitions or perhaps in the fullness of time, a move into other asset classes/additional markets.

Conclusion

A very worthwhile visit to the company & I came away greatly impressed with CEO, CFO & team members I met.

Setting up trading infrastructure & additional services are complex & time consuming for small institutions & individuals, so they appear to have developed an excellent niche & a cost-effective solution which would otherwise require clients to set-up & maintain networks. The BKS set-up is extremely fast with customers up and running within minutes.

There is also an opportunity for them to develop further services & add some small bolt-on acquisitions. Per the CEO, any acquisition must exhibit growth, be profitable & add value to the business. It was highlighted that most sales have occurred through word of mouth so they are looking to expand the sales team in the near term & are also viewing expansion in Asia & China.

Cenkos have PBT forecast of £1.2m this year (to 30.06.2018) & £2.1m PBT in 2018/19. I observed a team that are well incentivised & aligned in growing the company over the months & years to come. It was clear from my visit that the CEO has much loftier ambitions of growing the institutional investor base significantly from current numbers & should this occur then profitability should increase rapidly…& the share price will react accordingly!

Declaration

I have a modest holding in Beeks…so please DYOR & take my musings with the proverbial pinch of salt.

Kind regards,
GHF

[masurenguy] 22/2/2018 07:53

Looking good !

"The first six months of the year revenue increased by 40% year on year and our annualised committed monthly recurring revenues at 31 Dec 2017 reached £5.93m, meaning good visibility towards the full year end in June. We saw margins increase as we continue to utilise the capacity
and investments already made in the Group over the last 12 to 18 months, resulting in underlying EBITDA increasing 92% to £0.63m (H1 2017: £0.33m). Institutional customer numbers utilising the platform grew from 113 at 31 December 2016 to 170 at 31 December 2017. The Group ended the period with net cash of £2.55m"

RNS Number : 5887F
Beeks Financial Cloud Group PLC
22 February 2018

Interim Results

Beeks Financial Cloud Group plc, a niche cloud computing and connectivity provider for financial markets, is pleased to announce its unaudited results for the six months ended 31 December 2017.

Financial Highlights

-- Record results in line with management expectations
-- Revenue increased by 40% to £2.57m (H1 2017: £1.83m)
-- Good revenue visibility maintained with Annualised Committed Monthly Recurring Revenue up 50% at £5.93m (H1 2017: £3.96m), in line with management expectations

-- Gross profit up 62% to £1.20m (H1 2017: £0.74m)
-- Gross profit margin 46% (H1 2017: 40%)
-- Underlying* EBITDA increased by 92% to £0.63m (H1 2017: £0.33m)
-- Underlying* profit before tax up 124% to £0.28m (H1 2017: £0.13m).
-- Net loss before tax of £0.11m, reflecting exceptional items of £0.34m relating to the listing of the Group on AIM (H1 2017; loss of £0.18m)

-- Underlying* basic EPS up 31% to 0.51 pence (H1 2017: 0.39 pence). Basic and diluted EPS loss 0.39 pence (H1 2017: Loss 0.38 pence)

-- Net cash of £2.55m as at 31 December 2017 (31 December 2016: net debt£P0.68m)
-- Successful IPO on AIM in November 2017 raising £4.5m (before expenses)
*Underlying excludes IPO exceptional costs relating to AIM listing and amortisation on acquired intangibles

Operational Highlights

-- Launch of a new cloud hosting site in New Jersey, US, bringing the total number of sites to nine

-- Delivery of the first Fixed Income project, opening up a new asset class for the Group
-- Number of institutional clients increased to 170 as at 31 December 2017 (31 December 2016: 113)

-- Increased headcount for technical support and delivery
-- Enhanced sales channels through the launch of the Beeks Partner Portal, a self-service portal, and by joining the Equinix Cloud Exchange Fabric, the largest cloud marketplace of its kind in the world

Outlook

-- Exited first half of year in line with management expectations
-- Confident of continued growth and a successful outcome to the year

Gordon McArthur, CEO of Beeks Financial Cloud commented, "We are pleased to report on our first six months trading as a public company and are extremely proud of the organisation's achievements since we were formed in 2011. We have established Beeks as a leading technology provider in the growing global markets of automated trading in Forex and Futures financial products. We have continued to increase the number of financial institutions using our platform and now have connections to 180 trading venues around the world and nine data centre locations. Our business opportunities remain strong going into the start of the second half of the year as we see continued momentum to our infrastructure as a service model. We are confident the business will continue to grow. We will roll out more cloud hosting and have a strategic focus on Asia over the near term. The formation of our Chinese entity and offering is progressing well. We are investing in our sales team to exploit and drive our business forward. With an established and growing customer base, high levels of recurring revenue and strong market drivers, we are confident in delivering a successful outcome for the year."

[masurenguy] 21/2/2018 12:25

The shareprice started to motor two weeks ago - from 44.5p on 7 Feb to 67p this morning - which represents a 52% increase during that timeframe ! Awaiting interims, due by the end of March.

[cgequityinvest] 15/2/2018 22:53

David - well done on securing their attendance. I look forward to hearing what they have to say about the company's prospects.

Maiden interims are due out shortly so lets hope they whet our appetite.

[davidosh] 15/2/2018 16:44

As previously mentioned Beeks Financial will have a stand and be presenting at our huge Mello2018 event in Derby on 26th April and all shareholders and potential investors are welcome to attend

BKS have never attended or presented at a Mello event before and we are very pleased to welcome them so this is an ideal opportunity to meet the management and hear about their strategy.

Do come and join us at this quality two day event and there will be at least 35 other companies to meet each day plus some fabulous keynote speakers.

[cockerhoop] 14/2/2018 11:23

No problem

[busterdog2] 14/2/2018 07:28

And why would that be? Looking for a lower entry point?

[cockerhoop] 12/2/2018 18:10

Regards Stockopedia - I've found their forecasts somewhat flaky recently and have pointed out large errors at LPA, DSG & ASH which they have corrected. BKS may fall into the same category.

[glasshalfull] 12/2/2018 17:13

Here’s the link to ShareSoc discount I mentioned in previous post.



For a strictly limited time only, we are offering discounted tickets to Mello 2018 to all Full ShareSoc Members. You will be able to save £30 on as many as four 2-day tickets and £20 on one day tickets. When you sign up, we will send you a link for your discounted tickets. In addition we are offering a £10 discount off Full ShareSoc membership, upon entry of coupon code MELLO2018 below.

For Full Membership (which gives you voting rights and statutory membership of the company plus a wide variety of benefits), the fee is normally only £45 per annum (reduced to £35 for your first year with the discount) – our newsletters are delivered via email in that case.

[glasshalfull] 12/2/2018 17:07

Thanks for the welcome guys.

Good news is that on speaking with Edward Roskill I understand that BKS may be signing up to present & meet investors at Mello 2018 at Derby in April. Hope that proves to be the case.



David Stredder has intimated that investors signing up as FULL members for ShareSoc will be offered a £10 discount to join ShareSoc & also a 30% discount on Mello 2018 tickets.

Importantly we should hear news on trading or perhaps they may be able to release H1 results in the next fortnight. The latter would certainly be impressive as half year only finished on 31.12.17.

The initiation note from Cenkos covers much of the info contained in the admission document.



Pages 7-19 a must read for any prospective investors.

I was also quoting the diluted adjusted EPS forecasts but aware that Cenkos have 4 different EPS calcs in their forecasts. Perhaps that’s the disparity with Stock - o - pedia?

Irrespective, BKS are growing at a decent lick, strong recurring revenues and low churn and currently just over six racks of unused capacity on their platform, mostly London, with unused racks apparently capable of generating an average of £38,000 per month of recurring revenue, or in total around £3m of annualised revenue.... with little additional cost which is an important factor.

Kind regards
GHF

[masurenguy] 12/2/2018 16:36

Yes, it's good to see you as a fellow investor here GHF.

[cgequityinvest] 12/2/2018 16:20

GHF - good to have you onboard.

Its still a small business but the growth potential looks good and the prospective p/e's of 14.5 for current year ending june 18 and a p/e of 10 for June 2019 look attractive, together with the fact it is debt free with some cash in the bank.

I have encouraged the board (via email) to market/present themselves to the PI community but with Leon on board i guess he will be on the case.

Presumably you have seen a brokers note from Cenkos? I subscribe to Research Tree but its not available on that platform. Sharepad do give the base numbers (as do Stockopedia who appear to have the wrong/outdated numbers).

Will await the interims at end of month with interest.

[glasshalfull] 12/2/2018 10:32

Declaration that I was a strong buyer on Friday & partially responsible for the 7% rise. I’d simply missed this IPO in Nov but my investment colleagues L Boros & E Roskill mentioned their interest.

With share price below the IPO price due to general market turbulence it appeared an excellent opportunity to get in below the IPO price.

As I understand, the company will either be releasing interim results or t/s in the next fortnight. No reason to believe they’ll differ from positive trading mentioned in the admission document.

What piqued my interest was the strong & growing recurring revenue model adopted by BKS. Cash generation has been high & model has allowed company to make two acquisitions to date & invest in their infrastructure during 2016 & 2017 to support growth moving forward.

Their trading infrastructure & additional services appear complex & time consuming for small institutions & individuals to build so they appear to have developed an excellent niche with a cost effective service so that small companies & individual traders avoid the expense of setting up networks. Apparently the BKS set-up is extremely fast with customers up and running same day or within 24 hours.

Also appears that their focus on customer service, aligned with low cost & flexibility ensure that the company enjoys positive review and word of mouth with a customer base of 6,000 individual traders & 165 institutional clients at Sept 2017. The monthly IaaS revenue model gives great visibility of revenue & £4m net raised will hopefully allow for acceleration of growth.

Cenkos intimate that gross margins are forecast to substantially increase in 2018 and 2019 to 50-60% from 40% in 2017 following the significant investment undertaken.

They also forecast for diluted adjusted EPS of 3.4p in 2018 (30.06.2018) & 5.0p in 2019. Beeks are also looking to develop a progressive dividend policy.

Will post further on news or results.

Kind regards
GHF

[masurenguy] 12/2/2018 09:28

carcosa is right in that virtually all of their business is currently generated through a monthly fee. However, the current volatility could be beneficial by accelerating the rate at which the number of new clients come on board, since the level of algorithmic trading will presumably increase during periods of significant volatility, and also through existing clients both accessing additional services that would increase their monthly charge and the number of locations connecting to the service. To get a real handle on how all of this is impacting sales we probably need to review their very first interim statement that is due for release before the end of March (see #18 above).

[carcosa] 12/2/2018 09:04

See the Admission doc. It is my understanding (and am willing to be corrected!) that Beek's revenue is generated from a fixed service fee, paid in advance, and is not reliant on the number of transactions.

What I am interested in is the effect that Spectre & Meltdown vulnerabilities have on their low-latency service i.e. their competitive edge. However as these vulnerabilities effectively apply to all service providers then it would be a management decision as to whether or not to apply the patches. Until a few days ago no exploits had actually been found. These vulnerabilities may actual work to Beek's competitive advantage due to their hardware geographical architecture. However, I would very much doubt they could capitalise on the situation.

[busterdog2] 09/2/2018 16:00

Gents, I don’t know a great deal about Beeks but was wondering if the current market volatility was beneficial to their business. Any thoughts?

[cgequityinvest] 23/1/2018 18:07

I dropped the company an email asking when they expected to release the interims and if they were planning a trading update.

The CEO Gordon McArthur responded personally advising that the interims would be released before end March, i.e. in line with AIM regulations.

I have encouraged him to offer a presentation to PI's when the results are released.

[cgequityinvest] 22/1/2018 16:56

Good to see the Chairman buying 70k of shares - cost circa £35k.

"The Company also confirms that it received notification today that Mark Cubitt, the Non-executive Chairman of the Company, has agreed to purchase 70,707 of the New Shares at a price of 49.5 pence per share. Following this purchase, Mark Cubitt will hold a total of 70,707 shares in the Company, representing 0.14 per cent. of the issued share capital."

[masurenguy] 22/1/2018 11:55

Beeks Financial Cloud Joins Equinix Cloud Exchange to Continue Global Expansion

Forex leader to accelerate business performance using Equinix interconnection platform

REDWOOD CITY, Calif. and LONDON, Jan. 11, 2017 /PRNewswire/ -- Equinix, Inc. (Nasdaq: EQIX), the global interconnection and data center company, today announced global financial cloud infrastructure provider, Beeks Financial Cloud, has deployed on Equinix's Cloud Exchange as it continues to expand its business globally.

Beeks Financial Cloud leverages Cloud Exchange and Platform Equinix™ to connect its customers to global cloud services and networks via a secure, private and low-latency interconnection model. By joining the Equinix Cloud Exchange, Beeks Financial Cloud gains access to instantly connect to multiple cloud service providers (CSPs) in 21 markets, build a more secure application environment and reduce the total cost of private network connectivity to CSPs for its customers.

Highlights/Key Facts

Today, banks, brokers, forex companies and professional traders are increasingly relying on high-speed, secure and low-latency connections for more efficient business transactions, as demand for data centers and colocation services in the cloud, enterprise and financial services sector continues to grow. According to a July 2016 report by Gartner – Colocation-Based Interconnection Will Serve as the 'Glue' for Advanced Digital Business Applications – digital business is "enabled and enhanced through high-speed, secure, low-latency communication among enterprise assets, cloud resources, and an ecosystem of service providers and peers. Architects and IT leaders must consider carrier-neutral data center interconnection as a digital business enabler."

Beeks Financial Cloud, a UK-based company, first deployed in an Equinix London data center 4 years ago on one server rack, now has approximately 80 interconnections within Equinix across eight data centers situated in financial business hubs around the world. These direct connections provide increased performance and security between Beeks and its customers and partners across its digital supply chain. Beeks was the first provider in the world to use cross connects to ensure a retail trader customer had a direct connection to their broker.

Beeks' new deployment in Equinix's Cloud Exchange provides the necessary digital infrastructure and access to a mature financial services business ecosystem to connect with major financial services providers in key markets around the globe via the cloud. Equinix's global data centers are home to 1,000+ financial services companies and the world's largest multi-asset class electronic trading ecosystem— interconnected execution venues and trading platforms, market data vendors, service providers, and buy-side and sell-side firms.

Equinix's Cloud Exchange offers software-defined direct connections to multiple CSPs including Amazon Web Services (AWS), Google Cloud Platform, Microsoft Azure ExpressRoute and Office 365, IBM Softlayer, Oracle Cloud and others. This has allowed Beeks to scale up rapidly while securely connecting to multiple cloud providers.

Beeks Financial Cloud has continued to expand its business on Equinix's global interconnection platform of 146 International Business Exchanges™ (IBX®) in 40 markets across the globe. Beeks is currently deployed in Equinix's International Business Exchanges™ (IBX®) in London, New York, Frankfurt, Tokyo, Chicago, and most recently, Hong Kong.

The move to Equinix's Cloud Exchange is expected to help save approximately £1M over the next 3 years, while enabling Beeks Financial Cloud to meet the needs of its global customer base who thrive and grow through forex trading. London is a key player in the global digital economy, with the fifth largest GDP by metropolitan area in the world. Equinix's flagship London data center based in Slough (LD6) is one of the fastest-growing in the UK and has been established as a hub for businesses to interconnect in a secure colocation environment.

Gordon McArthur, CEO, Beeks Financial Cloud: "Beeks Financial Cloud has continued to grow rapidly on Equinix's interconnection platform, with Hong Kong being our eighth addition. Data centers underpin our business and we are confident that Equinix's Cloud Exchange will enable the speed, resilience and reduced latency our customers have come to expect from our company. Equinix's global footprint of interconnected data centers has allowed our business to really thrive."

James Eibisch, research director, EMEA Telecoms and Networking, IDC:"We see the global demand for data center colocation being largely driven by cloud adoption. That coupled with the expanded reach of Equinix's global interconnection platform is a compelling offering for businesses such as Beeks that require connectivity and access to new markets to meet business demand."

Russell Poole, managing director UK, Equinix:"We're seeing an increasing number of customers leverage our interconnection platform to expand their businesses globally. The rapid growth of the cloud industry is driving activity in all business sectors including financial services – we are seeing more businesses partner with us to host their critical financial infrastructures off-premise in our data centers in order to get the best out of the cloud. On Equinix Cloud Exchange, we are confident Beeks Financial Cloud will continue to accelerate its growth and move quickly into new markets."

Equinix, Inc. (NASDAQ: EQIX) connects the world's leading businesses to their customers, employees and partners inside the most interconnected data centres. In 40 markets across five continents, Equinix is where companies come together to realize new opportunities and accelerate their business, IT and cloud strategies. www.equinix.com.

[martywidget] 12/1/2018 10:00

Placing of 9,000,000 New Ordinary Shares of £0.00125 each and
5,000,000 Sale Shares of £0.00125 at 50.0p per Ordinary Share


"a positive welcome from the market since the start of the year."


The share price is positive from the start of the year and those that bought post IPO at the lower levels [for a 20%-30% trade].

{No position}

[the monkster] 11/1/2018 18:48

Are you looking at the right chart Marty ?? A positive welcome ?? What price was the iPo at ?

[martywidget] 09/1/2018 11:36

For anyone who hasn't watched this video:

Beeks Welcome Ceremony Video




Good to see a positive welcome from the market since the start of the year.

Regards.