Blue Prism Share Discussion Threads

[dan_the_epic] 17/5/2017 20:10

Hazl. That is fair because I was dubious beforehand.

If you have any qs on the cmd let me know

[hazl] 17/5/2017 20:08

You could be right but judging by your post 1180
I think you were already negative perhaps and with no position?
However thanks for the feedback.

[dan_the_epic] 17/5/2017 19:54

Having attended the CMD today, I'm going to be honest.

I am not convinced by Blue Prism's product set. It seems very basic and easily replicable. Moreover, despite what mgmt were saying, AI looks like the real gem and this looks like a mere stepping stone, as lucrative or not as that may be

Also sounds like the list price of £8k probably gets a decent slash when it comes to negotiations with customers. Ironically the CEO slipped and admitted that he expects pricing pressure with competition immediately (although he did his best to retrace his words and say that Blue prism needs to better demonstrate the value proposition).

The revenue growth tells a different story of course, but with costs likely to continue ramping into the future, am now believing the valuation here has moved ahead of itself.

A lot of higher profile people were there, Pictet, Investec, Old Mutual, Morgan Stanley, Henderson, Whitman Howard and asked quite a lot of questions. Pictet and Morgan Stanley were quite direct with their questioning.

Sogoesit. No way that R+D ramps down here anytime soon at all. If these guys are going to seriously compete into the future, with rising competition, they'll need to maintain r+d spend. Mgmt today said 10% of sales into the future seems sensible.

[hazl] 17/5/2017 18:27

tThank you sogoes it I think that was a very fair assessment.

[sogoesit] 17/5/2017 17:14

Note also that some on the Sophos thread compare it to PRSM.
Since SOPH has been on my watch-list, but not invested yet, I took quick look at the operational gearing aspects of the two after SOPH results today.
Looking quickly at the financials these are two different beasts imv. PRSM's incremental costs appear quite low whereas SOPH's R&D costs are probably continuous and will keep its operational gearing fairly low.
But, as the IC article says, there is no transparency on its intangible assets or R&D expenditure.

Both young and so too early to tell but, on that basis, PRSM is going to get to profit sooner and be more highly profitable than SOPH imv. Anyway, more digging to do.
Accumulated again yesterday around 770p.

[nimbo1] 17/5/2017 16:02

So looking at the numbers...this correct?

In oct 2014 - 2015 they sold 3.33 per month
In oct 2015 - 2016 they sold 15.75 per month
In oct 2016 - march 2017 they sold 30.2 per month

[nimbo1] 17/5/2017 15:42

Thanks for the article Sogoesit. Seems to me I/C are saying in summary its a growth company and needs to keep growing to support a higher share price. Makes sense!

[nimbo1] 17/5/2017 15:38

ha lets hope...

[sogoesit] 17/5/2017 15:38

Comment from Chronic Investor today:
By Ian Smith , 17 May 2017

Alternative Investment Market (Aim)-traded software company Blue Prism (PRSM) is in a hurry. It joined the market last March, placing 27m shares with institutional investors at 78p. Its shares are now trading at 766p. What can we make of its vertiginous rise?

The company is at the vanguard of a big corporate trend: the automation of routine tasks. Some argue that this will help solve the productivity puzzle discussed in our cover feature last week ('Lean mean profit machines', 18 May 2017): In the common parlance, 'robots' are coming for our jobs.

For Blue Prism, the term robot can be misleading: it sells 'robotic process automation' software that allows companies to automate back-office work. An example of such a 'robot' is one that can validate an insurance claim, add policy details and information from third-party systems, and pass it on to a claims handler, replacing the current management process.

The majority of Blue Prism's revenue (86 per cent in FY2016) comes from software licences, which include maintenance and support services, with the remainder from training and consultancy projects. It sells the licences to companies both directly and via 'partner' channels. In January, it announced that its partnership with Accenture (US: ACN) had delivered 40 clients, and that the professional services group would 'certify' more than 600 of its employees on Blue Prism technology.

The distribution is at hyper speed. The company made 189 licence deals in the year to October 2016, up from 40 in the prior financial year. Of those, 81 were upsells, as customers made greater use of the automation software or extended its reach. Another 151 software deals were made in the five months to March 2017.

Wariness of such growth stories is prudent: cyber security company NCC (NCC) is a good example of a company providing 'solutions' in a high-profile growth industry (cyber security), which came back to earth with a bump last year after certain contracts were cancelled and deferred.

Blue Prism splits its future contracted revenue (customers not yet invoiced) from billings. Of the billings, revenue is recognised on the income statement over the life of the contract, typically three years. The deferred income sits on the balance sheet as a liability. This is a more prudent model than some have employed, but failing contracts remains a downside risk.

One thing you'll notice is that Blue Prism has no intangible assets. Research and development costs are fully expensed as none has yet "met the criteria for capitalisation". Those criteria include the ability to measure the expenditure, to quantify the 'future economic benefits' of the product, and to effectively sell the product.

Accounting rules require that an asset should be recognised, whether internally generated or acquired, if it meets the definition. Many listed software companies will break down their intangible assets so that investors can compare the value of acquired intangible assets against internal development. This is arguably more transparent, but there can be a downside to capitalising such assets if companies overstretch and set themselves up for future writedowns. So some prefer to expense the development costs.

How confident can an investor be in the value of a company like Blue Prism, especially if those capitalisation hurdles aren't met for a product it is currently selling? It's possible bosses are being conservative about the future economic benefits. "We are working in an emerging market and it is not clear which technology will win," the company told me, defending its prudent accounting approach.

Fair enough. The company has patents on its original proprietary software. It has submitted applications for some of the applied software 'architecture' that it has developed since. But competitors could yet unstick its customer relationships; particularly if that relationship is between an end-client and their consultant. Blue Prism's enterprise value is equivalent to a demanding 23 times expected FY2017 sales (recognised revenue), falling to 19 times in FY2018. Further revenue upgrades will be needed to keep the price at current levels. Clearly, there is a disruption premium in the shares. This company is first through the door, and has its back wedged firmly against it.

[hazl] 17/5/2017 15:34

....or champagne nimbo??

[nimbo1] 17/5/2017 15:32

Its a tad frustrating when companies don't do an update with the capital markets days. They may not be providing any new information but you definitely get a lot of information from just being there - the mood / the conversations over a cuppa etc.

[eh9] 17/5/2017 15:09

Anyone got a link to the cmd slides ?

[luckymouse] 17/5/2017 14:46

Totally :D

[sogoesit] 17/5/2017 07:40

There appear to be more lines on that chart than a trader has lines of coke!
Is there a correlation? ;-)))

[luckymouse] 16/5/2017 23:25

no worries - just 'trade the breaks to target - follow only the hottest news & OBV'

micro cap stock picking in 12 words lol

[hazl] 16/5/2017 14:18

They don't call you Lucky for nothing!

Lucky and insightful. Thanks .

[luckymouse] 16/5/2017 14:09

Positive & constantly rising OBV vs a tiny free float of 40m - there should be a metric for that!

free stock charts from uk.advfn.com

[nimbo1] 16/5/2017 11:57

Hopefully Taptica - depending on the trading update?!

[buffetteer] 16/5/2017 11:51

Boo - forward PE of 70x and PEG of 3.5x - all in the price good luck

[darola] 16/5/2017 10:53

My wife has just discovered BOO, so I have no doubt they will be ahead of forecast!

[croasdalelfc] 16/5/2017 10:23

Sogoesit - agreed - it will probably outperform - more like 60-70%

[hazl] 16/5/2017 10:03

I don't know, but I think we are certainly in the right share of the future!

In my opinion,of course.

[petewy] 16/5/2017 09:53

Another move up next week?

[sogoesit] 16/5/2017 09:02

BOO are guiding 50% for the coming year which is not insubstantial.
Probably conservative.

[croasdalelfc] 16/5/2017 08:54

The companies I know that are saying FY results will be ahead/comfortably/materially of market expectations yet are only in Q2 are:PRSMFEVRCTOAnyone know any more?