Beeks provides low-latency Infrastructure-as-a-Service (IaaS) for automated trading of financial products.
H1 sparkles as Beeks secures secular growth
Beeks (BKS) interim results sparkle with: (i) 25% Y/Y growth in Annualised Committed Monthly Recurring Revenue, (ii) PBT +121% Y/Y, and (iii) operating cash flow +27% Y/Y, marking a decisive turn in cash generation. The strength of the business is reflected in 87% recurring revenue (H1 FY23: 93%), the low 0.5% attrition rate (H1 FY23: 0.8%), and improving operational leverage (underlying EBITDA 35.6% margin, +110bps Y/Y). The print is ‘significantly ahead of prior expectations’ and Exchange Cloud is a ‘transformational opportunity’ (via IaaS sales to exchanges, which in turn sell to clients). In our view, the risk to estimates is on the upside. The shares have been strong since the 6 Feb Trading Update, with TSR +71.7% YTD (vs sector +2.7%), yet valuation remains undemanding (EV/EBITDA c.10x vs sector 16.5x). Read on to learn about this structural growth compounder.