19.02.2025
Yesterday Beeks Financial Cloud (LON:BKS) announced its latest contract win, with its shares reacting positively on the news – gaining 23p to 323p, a 7.67% increase on the day, this morning they have given up some of that move, now at 301p.
However, there is so much more to come yet, making its shares even more attractive to Small Cap investors.
The Business
Set up in 2011, the Renfrew, Scotland-based group has been the leading managed cloud computing, connectivity and analytics provider in the financial markets since it was established.
It has connections to over 200 exchanges and leverages 20 data centres across the globe.
It delivers bare-metal cloud and low-latency compute, connectivity and analytics, on demand and optimised exclusively for global capital markets and financial services.
With sub-millisecond latencies, the Beeks infrastructure greatly expedites the time taken from placing a trade to its execution – a critical factor given the time-sensitivity demands of the group’s customers.
Its cloud-based ‘Infrastructure-as-a-Service’ (IaaS) model gives organisations the flexibility and agility to deploy and connect to a variety of Exchanges, trading venues and cloud service providers at a fraction of the cost of building their own networks and infrastructure.
Beeks is now recognised as an established technology provider to financial markets, with a track record and compelling reference clients, providing through its Private Cloud, Proximity Cloud and Exchange Cloud services, a strong foundation to drive its business forward.
Latest Exchange Win
Yesterday, Tuesday 18th February, the group announced that Grupo Bolsa Mexicana de Valores (BMV), the second-largest exchange in Latin America, has signed an agreement with IPC to deploy Beeks' technology infrastructure for co-location.
The deployment includes primary and disaster recovery sites in Mexico City, providing a secure solution to support BMV's market growth and innovation.
With the launch of this new infrastructure, set to go live in the second half of 2025, BMV will provide secure and scalable co-location services to its clients.
This will allow clients to host their operations directly on the platform, eliminating the need for a proprietary site, reducing barriers to entry for market participants and facilitating their operation in the Mexican financial markets.
With revenue recognition set to commence at the point of the solution's delivery, the deal further underpins the Board's FY25 expectations and adds to the company's increasing levels of contracted, multi-year, recurring revenue.
BMV is the fourth major international exchange to implement the Beeks infrastructure, reinforcing Beeks' positioning as a trusted partner for financial institutions.
The company is confident in fulfilling the offering's transformational potential, with advanced discussions taking place with other major Exchanges across the globe.
Grupo BMV CEO Jorge Alegría stated:
"This agreement allows us to deliver cutting-edge technology, with a low-latency infrastructure deployed locally in Mexico City.
We are well-positioned to meet the evolving needs of our market participants, remain at the forefront of innovation and as a leader in the region."
Beeks CEO Gordon McArthur stated that:
"We're proud to partner with BMV and leverage our established relationship with IPC to deliver cutting-edge solutions to the financial markets.
With four major exchanges now signed up and more in discussion, we have never been more confident in our ability to capture the opportunity ahead."
The Equity
There are some 67.18m shares in issue.
Gordon McArthur holds 36.91% of the equity, while other large holders include Canaccord Genuity Wealth (10.72%), Lombard Odier Asset Management Services (4.94%), Artemis Investment Management (4.33%), Janus Henderson Investors (4.32%), Octopus Investments (2.93%), Hargreaves Lansdown Asset Management (1.78%), Herald Investment Management (1.49%), and Liontrust Investment Partners (1.16%), Gresham House Asset Management (0.99%) and HSBC Market Maker (0.76%).
Researcher’s Views
At Canaccord Genuity Capital Markets, its analysts Kai Korschelt, Hayley Palmer and Tom Like rate the group’s shares as a Buy.
They estimate that the year to end-June 2025 will report £39.6m (£28.5m) of sales, while adjusted pre-tax profits could have risen to £6.1m (£3.9m) and lifting earnings to 7.7p (6.6p) per share.
For the coming year the analysts go for £45.7m revenues, £7.7m profits and 9.5p per share in earnings.
My View
On Thursday 3rd October last year, I highlighted Beeks again at the then price of 242p, suggesting they they looked ready for another positive run higher.
Well, that rise is now underway, having subsequently risen 33%.
I now look forward to reading the Interim Results Statement on Monday 17th March, together with any guidance from the group for the balance of the current-year and future prospects.
This really is a machine that is just rolling progressively ahead, creating ever-building recurring revenues along the way.
Although its rating may well look ‘toppy’ I still suggest that there is more to come from this £202m capitalised group.
(Profile 01.03.23 @ 145p set a Target Price of 180p*)
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