Trakm8 - Finals

Trakm8 released a great set of results on Monday. I believe that there is massive potential here, and below I have detailed some of the highlights for me:-

Firstly, this is a company achieving rapid growth organically and through acquisition in a area where a clear tipping point has been reached as companies clamour for Big Data. Revenues were up 94% at £9.19m (5 months contribution from Box Telematics) with recurring revenues up 111% at £4.5m. Like for like orders were up 46%.

This is profitable growth with good cash generation, and their recent acquisition was immediately earnings enhancing. Operating cash flow was £1.32m and adjusted EPS rose from 0.79p to 3.48p.

A major contract has been secured with Direct Line Insurance which is significant and potentially transformational for the company, and the outlook statement states that in the year to date revenues are well ahead of last year and trading is in line with expectations.

The narrative in the report is very positive with revenues from recently announced contracts to start really flowing through in the current financial year and beyond, providing a solid stream of recurring revenues now and in the future. Interestingly,  they launched a sales and applications engineering team out of their office in Prague this year. This operation has secured several customers and they expect it to be self-funding by the end of the next financial year, following initial start-up costs.

I am still very excited by Trakm8's development where they are achieving profitable growth, generating strong cash flows, excellent gross margins, and strongly increasing recurring revenues which make up more than 50% of total revenues.

Their financial model is very strong, and it will be interesting to see if they can identify any further value enhancing acquisitions in the near future. One intriguing snippet from their final report says:- "The market remains largely fragmented although consolidation is occurring, particularly driven by interest in the space from VCs."

Trakm8 may be a predator at the moment, but I wouldn't discount the possibility of them becoming the prey either, although given the opportunity that lies ahead I'd prefer to see the company transform itself into a multi-million pound cap. by itself. Certainly, the management appear to be doing a great job at the moment.