Gresham Technologies Share Discussion Threads

[gottafly] 06/1/2019 15:40

amt thanks for your analysis, the problem is that GHT is required to produce results at the half year and full year, this might not be entirely logical but they are the 'rules' and GHT have little choice to embraced it and comply, quite simply it is a big part of IM's job..

Yes with the delayed deals it would have looked much better but still a number (most?) of GHT's chosen KPI's would still be a significant miss. Also please don't forget the acquisitions - B2 and C24 - have made a reasonably significant contribution to this growth, so organic Clareti growth is much less than you suggest. I believe, as stated previously (more than once, boring I know)that the acquisition of B2 has deflected management focus and caused a knock back on organic growth.

To be fair, Clareti recurring revenue is the one bright spot but Group revenue, overall Clareti revenue growth, EBITDA, and Net Cash (although still looking pretty healthy) have all disappointed and I repeat these are GHT selected KPI's.

Three trading updates in the last three months shows that GHT simply does not have a grip on things. Yes it is difficult to predict large/elephant sales but what experience teaches you is that they tend to slip right and GHT knew that the low hanging fruit had largely been consumed.

I hope I am correct in my view that the Clareti technology and the GHT team are first class but delivering investor return (Capital Growth/Dividend income) and an orderly market in the share price seem to be very much work in progress!

[amt] 05/1/2019 23:06

So Clareti growth rate over last 4 years getting on for 50% per annum compounded. Not to be sniffed at. I wonder if share price will follow same pattern of recovery as occurred in 2014. Directors bought shares at that time incidentally.

[amt] 05/1/2019 22:59

Yes if you take the 1.8m of Clareti revenue that got deferred into 2019 you get to about 25% growth.
I have just looked back 4 plus years ago when the share price was where it is now. At that point Clareti annual sales were 3 million or so of which 1m was recurring. So sales have gone up nearly 4 fold and recurring 8 fold. So puts the current share price into perspective. Frankly very little has changed from the situation 6 months ago except they have won the biggest contract in their history so the share price fall from 2.20 to 65p is just anomalies in the stock market. It was overvalued and now undervalued. I suspect the correct value is half way between say 1.50

[amt] 05/1/2019 18:12

Sales of Clareti products. are growing rapidly at about 25% per annum. For the key subscription products the annualised growth is more like 50%.

[gottafly] 05/1/2019 17:33

Ok let's ignore forecasts and hopefully agree that a company needs a plan, needs to grow and deliver shareholder value, so a shareholder negative return of over 50% is dire, no matter how you doing the numbers, total mismanagement by IM in my view and it needs sorting quickly.

If GHT is doing great then the GHT messaging/communication strategy is wrong, if sales of the class leading Clareti product set are not really happening/accelerating (as the figures suggest no matter how spin it) then this needs sorting.

GHT has work to do and quickly or simply find a buyer to put us all out of this misery - non execs please note!

[valhamos] 05/1/2019 14:30

Amt I agree. I ignore forecasts generally or take them with a large pinch of salt. But specifically for software companies where historically a large proportion of revenue has depended on the timing of a small number of deals they are worse than useless. It is going to be better all round as we move increasingly to a subscription model.

[amt] 05/1/2019 11:29

Gotta fly. Forecasting is very difficult. I couldn't care less if they miss their fcast because the missed the deal deadline by a week or two. The city is obsessed with fcasts and short term ism. It provides opportunities for longtermers to get in on the cheap. IM has all the experience and expertise needed we don't want more overhead added in my view. They didn't blame Brexit which would have been easy to do and as we know is causing a delay in investing so might be having some impact. Once resolved (Brexit) then pent up demand should be released.

[gottafly] 05/1/2019 09:40

Jadeticl3

For me the issue is not good news or bad news, clearly the biggest ever contract is good news but the fact that these were not signed in Dec, as was needed for the previous trading statement, is bad news, so both good and bad.

Clearly progress is being made with Clareti but also what is clear is that, as we have discussed before on here, getting big deals across the line and replacing incumbent software is tough and takes time. If we know this, then why don't GHT. Sadly, it seems that GHT lack the sales expertise and seem to be learning it the hard way to the cost of us investors. Why is the main board just composed of CEO and FD, no commercial/sales/business director?

I would also say that the vision for Clareti/GHT is very high level and generalised such that, particularly as a new investor, what would you be investing in, so in my view no real strategy is published other than we do ground breaking cool stuff. Added to this, the fact that the forecasts have either been missed or just about made during IM's leadership, does not in still confidence (for me). IM is either overworked, out of his depth of perhaps both and he has simply not delivered.

GHT needs to make changes, regardless as to whether IM stays in post. We need a clearer strategy and a 3/5 year plan, good and clear communication and delivery against a plan, the time of 'trust he's just be over, GHT needs to start selling us the future direction. As stated previously I have the highest regard for the GHT team and their technical ability, however given the performance of the last 3 years I doubt IM can deliver. Most likely outcome in my view is a predatory bid and the end of GHT and Clareti sold on the cheap.

As always DYOR.

[amt] 05/1/2019 08:32

There are some positives such as annualised Clareti revenue going from 6.2m to 8.8m imminently since July.
2019 are going to look strong with Clareti growth of at least 50%.
I reckon going forward we can expect Clareti recurring revenues to increase by at least 50% per annun
So 2019 say 11m (perhaps higher as already 8.8m run rate)
2020 17m
2021 26m
At 90% margin the increase from 2019 of 15m is going to drop directly to bottom line.
So I reckon overall an additional 13m of profit in 2021 equates to say a market cap of 260m or share price of 3.50 quid plus. So a 5 fold increase in share price over the next 3 years is what I will settle for. I am assuming the rest of Clariti and other part of business don't contribute anything additional or if they do they are offset by additional costs.

[jadeticl3] 04/1/2019 20:18

Well, well! I am struggling to make up my mind as to whether this update is good or bad news compared with the previous statement. I need to go through all this again.

[amt] 04/1/2019 16:33

Agree Valhamos. Hopefully the share price can recover to fair value. Somewhere between 61p and 220p in the coming months.

[valhamos] 04/1/2019 16:28

The key number here is the growing Clareti ARR.

I note that the company has "taken the opportunity to re-profile both agreements on an annuity subscription basis in order to provide higher levels of revenue visibility and earnings quality for future years."

I much prefer contracts on a subscription basis for these reasons and hopefully we can move away from the the annual anxiety as to which accounting year revenue/profits are booked.

[amt] 04/1/2019 16:11

Gotta fly. They signed a 7 million contract. The biggest in their history (by miles) If they had signed it a few weeks ago and taken 1.8m of revenue in the 2018 numbers everyone would have been reasonably happy. That would have been 20%growth instead of flat. I mentioned a few days ago they must have missed their numbers but we were warned about that a few weeks back so the infirmation flow has not been mismanaged its just a fact. The results are dire but they are what they are and all has been communicated very quickly. No panic involved. I think it's now a good longterm buy having been overvalued at 2.20.

[gottafly] 04/1/2019 15:24

amt sorry to disagree but these are dire results and were greeted with an immediate 10% drop in the share price Richjp made the comment of not to expect a trading update this week since it would likely not be good news, sadly that is the case.

The trading update of Dec 6th forecast a material drop in Ebitda, flat revenues and continued strong Clareti growth. Sadly, with be B2 Group separately allowed for, Clareti growth was flat (2%) and the overall revenues materially below, so a miss on all three indicators. The fact that the announcement was done at noon and not at the normal 7 am, further hints at a degree of panic to ensure the market is properly informed.

Personally, I don't doubt the prospects for Clareti, but the mismanagement of the investor information is of gargantuan proportions. For a company with such big prospects how can the share price be where it is, IM has a lot to answer for and in my views has lost the plot.

The jam tomorrow, described as confidence, may prove to be true but will GHT be able to deliver. If Clareti is as good as it's supposed to be then the sharks will be circling and we can expect a bid soon.

As always DYOR.

[gottafly] 04/1/2019 15:24

amt sorry to disagree but these are dire results and were greeted with an immediate 10% drop in the share price Richjp made the comment of not to expect a trading update this week since it would likely not be good news, sadly that is the case.

The trading update of Dec 6th forecast a material drop in Ebitda, flat revenues and continued strong Clareti growth. Sadly, with be B2 Group separately allowed for, Clareti growth was flat (2%) and the overall revenues materially below, so a miss on all three indicators. The fact that the announcement was done at noon and not at the normal 7 am, further hints at a degree of panic to ensure the market is properly informed.

Personally, I don't doubt the prospects for Clareti, but the mismanagement of the investor information is of gargantuan proportions. For a company with such big prospects how can the share price be where it is, IM has a lot to answer for and in my views has lost the plot.

The jam tomorrow, described as confidence, may prove to be true but will GHT be able to deliver. If Clareti is as good as it's supposed to be then the sharks will be circling and we can expect a bid soon.

As always DYOR.

[amt] 04/1/2019 13:58

Surprisingly good update. Very big contracts just in wrong period. Next Yr v good.

[double double] 04/1/2019 13:00

IM who has been ignoring the RNS system now seems to want to use as often as possible. Must be feeling the pressure.

[double double] 04/1/2019 12:06

The total software value of both agreements over a five-year period is expected to be in excess of £7 million, of which £1.8 million is expected to be recognised in early 2019. Further details on these projects will be provided in due course.


and


The Group closed the year with cash at £5.3 million and remains debt free

[jadeticl3] 03/1/2019 13:00

Just found it. Released on January 9th 2018. It was very encouraging!!!

[double double] 03/1/2019 12:59

Hoping for it next week around the 9th if they do same again.

[jadeticl3] 03/1/2019 12:56

Did we get an update last January? If so, was it early in the month?

[double double] 03/1/2019 08:22

Just added a small amount will do more as and when.

[richjp] 02/1/2019 15:25

This is a quiet week in the city when usually only bad news gets announced. A TU next week should be more encouraging.

[tacticaltrader] 02/1/2019 09:47

Surely unless we hear otherwise all we can presume is that everything is as per last statement ie deals expected to have been signed by year end etc.