Gresham Technologies Share Discussion Threads

[scepticalinvestor] 01/12/2023 12:59

Can buy now in volume at 118

[gerihatrick] 01/12/2023 12:31

I was surprised to see a Tier 1 financial organisation has signed up a multi year contract with Spirent and this is a whole new area for them. My question is does this reflect on GHT in that we provide systems to banks?

[qantas] 23/11/2023 17:38

Thu 23 Nov 2023

(Sharecast News) - The boss and finance director of Gresham Technologies picked up some shares in the company.
According to the outfit, Ian Manocha, the company's chief executive officer, bought a further 5,000 shares at 121p while finance director, Tom Mullan, bought 12,385 shares at 120p, both on 22 November.

That took their respective holdings in the company to 0.199% and 0.090% of the company's share capital, respectively.

A week before, Gresham had forecast that full-year 2023 revenues and earnings would be in-line with market expectations.

Management also said that it continued to have a "solid" pipeline of opportunities from both new and existing customers, and was expecting to close additional Clareti subscription business before the end of the year.

Top Director Buys

Gresham Technologies (GHT)
Director name: Mullan,Tom
Amount purchased: 12,385 @ 120.00p
Value: �1,4862.00

Please do your own research as always

[amt] 23/11/2023 14:43

They answered my question and have bought.

[amt] 20/11/2023 08:13

Can Directors buy at the moment, they were buying at 160p back in March ?

[amt] 19/11/2023 07:42

My guess is that Kestrel might be the large buyer. I think they own 23%.

[richjp] 18/11/2023 16:54

I think the market reaction may be due to the cautious 2024 outlook, rather than the discontinuation of the legacy business.

Both Techinvest and TechmarketView in the past have referred to GHT's software as being transformational in GHT's market area. I know however from my own past experience in IT sales it doesn't matter how good your product is, it can still be very difficult to dislodge incumbent suppliers. That is the reason I feel for the stubbornly low organic growth and the disappointing share price performance.

As amt and others have pointed out, the business model is very sound indeed but I think the company is now a sitting duck for a takeover. Discontinuing the legacy business makes it even more so as the company has a cleaner structure.

If a bid does come I just hope that more than one buyer is interested so that we might get a bidding process.

[scepticalinvestor] 18/11/2023 14:45

I reckon it will drop further with lack of news.Back on my watch list - target buy in at abt 100p

[amt] 18/11/2023 08:10

I managed to load up at around 1.20p before the big buyer moved in.
Thanks to all the bears who made it possible. Just hope I timed it right but always a risk of a takeover so didn't want to leave it too long.

[amt] 17/11/2023 16:13

WJC 3 times sales would still be a market cap of 130m so at worst that's a 30% uplift. Compared to Sopheon it would be 150m so share price of 1.80p.
As you say a much better business and likely that several companies would like to add it to their portfolio

[amt] 17/11/2023 16:07

800,000 shares bought early afternoon.

[wjccghcc] 17/11/2023 16:04

It was disclosed in the risk factors and they always said it was a twelve month contract but you make a fair point.

To be honest, I expect they didn't know until the renewal discussions began. Pretty much every bank is rationalising their IT budgets in this macro environment and with Floe development winding down now it's being launched, ANZ clearly took the view that 13% margin for freelance IT contracting could be reduced significantly by using a local operator.

I guess we should be grateful it lasted this long and allowed Clareti to get to a cashflow positive position.

Regarding value, I don't disagree in the short-term. Having said that, Sopheon was just bought for 4 x ARR / 3 x sales and IMHO Clareti is a much more attractive business.

[amt] 17/11/2023 16:03

Redwing, Management have been flagging the loss of legacy revenue for years. I think they have been surprised that it survived all this time. They could have classified as discontinued business which would have been more accurate.
Dont forget the change in model over the last few years to annual subs so the recurring turnover should be valued at 5x

[redwing1] 17/11/2023 15:56

Thanks WJCCGHCC - I stand corrected on the low amount of remaining non-Clareti revenue. That is definitely some reassurance for holders, although I would argue that a current EV of c£96m more than adequately values £40m of annual revenues for now.

I am also left wondering why management did nothing to flag the potential loss of these legacy revenues to shareholders earlier? After all, they have been working very closely with ANZ on both the Floe product and Clareti for some time. Surely this possibility was well known by management? A cynic might argue that they wanted to get the positive Floe launch out in the market first.

[amt] 17/11/2023 15:46

WJC thanks for clarifying. I am even more relaxed now and will keep adding.
It's a pity that another British company that had been building Clareti revenues for over a decade is likely to be bought out. Its almost like a royalty stream.

[wjccghcc] 17/11/2023 15:45

It looks like the institutions agree. They've hoovered up all the retail sales from this morning and now I can't get a quote to buy in any size but can sell pretty much any amount.

[amt] 17/11/2023 15:43

The 12.8m is all the legacy revenue. So they have lost 8.5 so 4m more with income of about half a million.
The Bulls are relaxed because legacy was just a bit of a bonus and I was always surprised how it seemed to go on for longer than expected.

[wjccghcc] 17/11/2023 15:41

I think you forgot to take out the 8.5mm contracting revenues. There are minimal non recurring legacy revenues remaining.

FY22 Clareti recurring 27.4mm
FY22 Clareti nonrecurrng 8.1mm
FY22 nonClareti rcrrng. 4.3mm
FY22 nonClareti nonrcrrng 8.9mm (of which 8mm was the ANZ contracting)

SCM now forecast FY24 revenues of 44mm of which 33mm (75%) are Clareti recurring. Non Clareti ARR was 3.2mm at H1 and that's the VDT license reselling which is continuing.

That leaves 7.8mm for non-recurring revenues which is almost all the Clareti Services which fluctuate depending on implementations etc.. I reckon legacy non-recurring revenues (which are the oneoff costs associated with the VDT license sales) are below 500k.

I wouldn't say I was relaxed but this was going to happen at some point. Yes it would have been nice if it had continued for 5 years generating 5-6mm of cash but that's more than been compensated for by the 15mm reduction in the mkt cap.

Floe's costs are equal to its 2mm ARR so that's a wash. What you have left is a 31mm ARR sticky Clareti business growing at 10% yoy generating 4-5mm of FCF.

What value the market assigns to that compared to a buyer looking ahead a few years seems too low IMHO.

[gnnmartin] 17/11/2023 15:29

A fair comment. It is hard to see without some guidance why it is good to lose a chunk of business. OK it was legacy, going to shrink, low margin, but it was profitable. If the loss of profit is balanced by consequential savings elsewhere, why not say so? If there is no consequential saving, why close the business? I can guess possible justifications, but why are we left to guess?

[redwing1] 17/11/2023 14:57

Frankly, I can't understand how the bulls on this forum are so relaxed about developments. This was a solid cash generative part of the business making a respectable 13% margin and accounting for 17% of group sales, which has suddenly disappeared in a puff of smoke.

What about the remaining legacy revenues? There are £12.8m of those. When do they become obsolete? This leaves Clareti and Floe having to do a huge part of the lifting just to get back to where revenues started.

A reminder: don't forget that for all its growth, Clareti has only just turned profitable at the operating level and cashflow positive. Floe has one customer at the moment (and presumably will be loss making for some time).

It may well be that both Clareti and Floe have very bright futures but you are taking a lot on trust. Good luck to all the optimistic holders.

[amt] 17/11/2023 11:39

It's clear from some of the posts that there is a lack of understanding of the business. I shouldn't complain its great to buy more at a bargain price.

[amt] 17/11/2023 11:34

Jimmy It makes no sense for them trying to pick up contracting business elsewhere. They have been getting rid of that part of the business for years. So good to get rid of it and concentrate on the real business which is Clareti and potentially Floe.

[amt] 17/11/2023 11:31

The contracting business was irrelevant. It had no longterm value and now suddenly the market gives it a value of 18m, bonkers