Trakm8 - Half yearly results

Just a quick commentary about Trakm8's half-yearly results which were released this morning. Firstly, as anticipated, the results didn't disappoint and the outlook is very encouraging.

The headline figures are impressive with revenues up 38% at £11.7m, recurring revenues increasing 65% to almost £4m, EBITDA up 70% at £1.9m and adjusted profit up 89% at around £1.5m giving adjusted EPS at 5.08p.

The narrative of the report is highly encouraging with these comments of particular interest:-

"Recent contract wins and the stronger than budgeted start to the year mean we now believe that we will modestly exceed the current market expectations for the year as a whole."

"The installed base of devices reporting to our servers continues to increase rapidly and these recurring revenues are the core of Trakm8's business model and financial security."

"The value of new orders received during the period continued the good trend of recent years and were up by 21% (excluding DCS). This reinforces the confidence we have that strong organic growth can be maintained. "

 "Gross margin percentages have also benefited from the higher levels of service revenues."

"The data analytics from our data science team has been used to create service, driver risk scoring and FNOL (first notification of loss) algorithms that are proving to be of great interest to current and potential customers. We have also identified opportunities to sell some of our data in an anonymised format."

 "At the period end we had approximately 135,000 units reporting to our servers being an increase of 74% over last year. "

 "We have expanded our sales resource and as a result developed a good pipeline of opportunities, with a large number of significant trials in progress. We anticipate that revenues will continue to grow strongly in this area. "

"...we expect second half of the year revenues will be considerably ahead of the first six months."

These are just a few snippets that provide encouragement to investors for the short, medium and long term. Trakm8 have also made two acquisitions in the past two or three years which have been integrated effectively and quickly proved earnings enhancing. The narrative hints at further acquisitions being made in the not too distant future.

 "Now that DCS is operating to our satisfaction, we continue to assess further acquisition opportunities to enhance our organic growth."

Whilst the current forecast p/e ratio for this year and next come in at around 22 and 17 respectively, Trakm8 is making a habit of over-delivering. If the company were to make further strides in the USA or elsewhere overseas and/or announce a further earnings enhancing acquisition then the shares will look very good value at the current price of £2.60.

Just to reiterate, I have been a holder of shares in Trakm8 for some time.

Ideagen

Interesting update from Ideagen this morning:-

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/12588283.html

The key line is for investors is:-

"Trading in the first half of the year remained strong. Revenues and adjusted EBITDA are expected to be significantly ahead of the same period last year and in line with market expectations."

Broker forecasts for year ending April 2016 are for revenues of £21.8m, pre-tax profit £5.7m and adjusted EPS of 2.7p. At the current share price of 50p the forward p/e is 18.5. The company boasts a strong balance sheet with no debt. Ideagen's current market cap. is £88m.

The company is cash generative and pays a small dividend. Gross margins are high and recurring revenues make up over 50% of total revenue. It's a company that certainly warrants further investigation.

I mention Ideagen since they are a very similar company to Access Intelligence. I don't own shares in Ideagen, but I do have a holding in Access Intelligence.

I last reported on Access Intelligence back in May 2015:-

http://michae1mouse.blogspot.co.uk/2015/05/intelligent-choices.html

Since then they have released encouraging interim results:-

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/12472562.html

The company is currently valued at £14m and they usually release a trading statement in early December. I await news with interest.

TRAKM8

I notice that the Floow who work alongside Trakm8 on the Direct Line contract have been recognised for this work with a prestigious international Road Safety Award:-

http://www.thefloow.com/blog/posts/the-floow-awarded-prestigious-international-road-safety-award

"The Floow have received this award for work undertaken in collaboration with the UK’s largest insurer, Direct Line Group, and have been especially recognised for the “development and implementation of feedback to influence driver behaviour”."

"Launched in 2014, and primarily focused at younger drivers, by the end of September 2015 over 67,000 drivers had embraced Direct Line DrivePlus telematics insurance, and are making use of the feedback platform to become better drivers. That’s up by over 75% in 2015 to date.

The leading insurance group, working in partnership with Sheffield-based The Floow, aim for the number of users to further increase in the coming months as more people see the economic, environmental and safety benefits of understanding how they drive and how their safety can be improved."

Why use one sentence when several more can be used in it's place?

A few years ago whilst employed with an organisation that shall remain nameless I used to dread the habitual Friday afternoon meeting. I kid you not, it used to last two or three hours and I'm pretty sure I must have nodded off to sleep on more than one occasion (hopefully discreetly and unnoticed). One of the reasons that the meetings were so long was because a key contributor just loved the sound of his own voice. Even worse he would try and construct sentences that were so obtuse they were almost impossible to decipher. I think he was probably trying to create an image of himself as an intellectual and/or deep thinker. However, when you did eventually decipher what he had actually said, it amounted to sod all. I think he might have ended up at Blinkx under an assumed name (just joking). From today's half-yearly report:-

"The Company's mission is to democratize access to quality digital content in a way that is respectful of consumer choice, impactful for the advertiser and sustainable for the content owner. Solving this fundamental equation is critical in order for the industry to thrive. These basic tenets will guide blinkx's decision-making in the near- and long-term, and represent a path to sustainable growth for both the Company and industry."

 

In short, he might have written, "We want to return to profitability, but at the moment we're totally f***ing clueless" 

 

Perhaps that's a little bit harsh, but after recording a whopping $79,000,000 loss they clearly have some work to do.

 

In fairness, I don't know much about Blinkx and can only assume that something in today's statement is propping up the share price. At a glance the company does appear to boast a strong balance sheet.

 

Anyway, it's not one I wish to research and I'll leave this one to the bulls and bears who have done their due diligence.

 

In other news, Angle released another encouraging RNS this morning regarding progress with the commercialisation of it's Parsortix device.

 

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/12584389.html

 

For Parsortix to be successful, verification of it's utility from organisations such as Cancer Research UK Manchester Institute are absolutely critical. I am encouraged by the build up of evidence that has now been received from a number of prestigious institutions including tests involving a variety of cancers. Today's report focussed on Lung Cancer, the most common cancer in the world.

 

Key points for me from today's release are as follows:-

 

"ANGLE's Parsortix system "… offers a unique combination of features making it suitable for routine clinical analysis of patient blood samples" "

 

"Ged Brady, Deputy and Genomics Leader within the Clinical & Experimental Pharmacology group at Cancer Research UK Manchester Institute, commented:

"The Parsortix system has a unique combination of features making it suitable for routine clinical analysis of patient blood samples.  We have now incorporated the Parsortix workflow into multiple clinical trials and have been accumulating many hundreds of stored enriched samples that will be of immense value in our future CTC studies."  "

 

"ANGLE's Founder and Chief Executive, Andrew Newland, added:

"This is our second peer-reviewed publication in a scientific journal and adds to the growing body of published evidence of Parsortix's performance as a liquid biopsy.  The success in pilot studies in harvesting CTCs from 100% of small-cell lung cancer patients comes after similar performance with 100% of prostate, breast and ovarian cancer types.  We believe Parsortix is changing the paradigm for CTC capture and harvest for liquid biopsy and will change CTC molecular analysis from being a theoretical but impractical goal to being simple and effective in hospital laboratories all over the world.  The prospect of deployment of our repeatable, non-invasive liquid biopsy in the treatment of lung cancer patients is exciting and has the potential to make a major impact in improving future cancer care."  "

 

Still a speculative investment until sales begin to arrive of course, but critically the experts are impressed and so far they have all verified Parsortix's potential and utility. I await further news with interest.