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Great RNS. Size is irrelevant, what is key is that this is the first contract with a US state organisation. We know how the size of uk government contracts have grown over the years and by the looks the same is being replicated in the US, which is a much larger market.
Cheers Share.
The standard / accepted renewal KPI is based on £ value rather than number of customers (there is some inconsistently on whether, on renewal, to count in additional seats so a renewal rate can be over 100%).
Suggests the overall number of customers coming up for renewal was low, probably true if these relate to contracts 2/3 years ago when the order value in that period was low.
On a low population the % can be heavily skewed, and it doesnt really "relate" in a fast growth company - so a KPI to take with a pinch of salt at the moment but more meaningful in 25/26 when the current deals are up for renewal.
Angus confirmed NO further cash raise needed, no debt, cash flow positive from end H1 2024. Also explained that the drop in renewals was due to the loss of a couple very small customers spending a few thousand a year not renewing, whereby the clients are now getting bigger and more sticky. 2024 does indeed look transformational for ANGS https://twitter.com/RoastPR/status/1747888208979927487
It was an ok update. Renewal rate drop was disappointing, but nice new contract win, albeit small.
Pipeline is encouraging but the key is converting that into hard sales. If that's achieved, this will go well in 2024/5. Commercialisation is key.
A nice update and looks undervalued, maybe it needs a bit more pr to get noticed by a wider audience, happy to hold gla
Quick look.
- Cash good and can see through without a raise
- Forward revenue £2.9m needs to be split into 2024 / 2025+ as its effectively a meaningless KPI
- Renewal rate dip is a concern, 85% is at the low end of a SaaS company
- Pipeline stats are impressive, but as usual the devil is in the detail on weighting, timing, sales stage, closure rates.
- Channel management is key, better to focus on a couple of key channels with clear industry / product / geographic focus which the company supports than just signing up hundreds (all of who have 100s of such relationships)
Overall positive, will add at these levels.
Smart move, just tuck them away. If you look at the chart the pattern is clear ie 4-5 low and 10p high. No doubt this will happen again in 2024. Angus mentioned profitable from H2 2024 and shares always move on expectation of such news, he also mentioned that the legacy pre ACRM sellers have liquidated in 2023 and that was a key drag which is now no more. Enough from me, time to accumulate and sit back patiently as we know SAAS businesses like this should be valued as per Angus 6-9x revenues not 1-2x DYOR
08:13:37 4.75 25,000 Unknown* is A BUY!!
Looked at the RNS again, just extrapolate: As at 12 January 2024 the bank cash balance £901,000.Forward contracted revenue as at 31 December 2023 £2.9m. MCAP only £5.7mio and no debt. Legacy shareholders exited in 2023, most shares now in strong hands, the re-rate might be slow as still under the radar, but we know it will come from 5p and we will revisit the previous 10p highs DYOR
Great update and definitely 2024 should be a turning point for such a small cap revenue generating #ACRM
Just listened to the latest interview over the festive season, 2024 should be very interesting https://audioboom.com/posts/8421293-12-stocks-for-the-12-days-of-christmas-featuring-angus-forrest-chairman-and-kerry-chambers-ceo
I think this could be one of those company’s that will do very well this year, hopefully a few more contracts will come in, low m/c and a lot in sticky hands so a tight register. Now is the time to buy when under the radar gla
Skid35/Brondby
I would like to think you are right about the issue being a relic from the past. But as you say more clarity would have helped to close down this risk. The fact is whatever the historical origin it would have been sensible and good business practise to have recovered these rights.
The risk is that either counterparty allows the source code to find its way into a competitors hands. ACRM claims to have the USP of their software is that its an all in one software package. Loss of this USP would be very unfortunate.
It would be very useful to know who are the counterparties. In the admission document it states:
"Were this counterparty to have the right to sell or to publish all of the STREAM® software as open source and exercise such right then the publishing of the source code of the software as open source would be likely to devalue the STREAM® software to a significant extent, which in turn would be likely to have a material adverse effect on the value of ARM."
The other risk is that if the source code is published or made available, could this benefit those who seek to engage in cyber attacks or in some way circumvent a company's IT security?
Volmer / Brondby.
A really interesting one. Clearly would have been good to have more clarity legally to close the risk down but I can see the counterparties not wanting to spend hard cash on expensive IP lawyers as they dont need to engage unless Acuity provide some consideration.
Firstly Acuity did not give the right to IP, it was retained. Reading between the lines the software seems to have originally been developed in an era when there was a lot on "in house" developments using some third party support - hence the two counterparties and a lack of clarity of background / foreground IP.
There is really no fault from corporate legal / existing acuity management here, just some slightly messy history. The key element is no royalties seem to be passing between Acuity and the counterparties for ongoing contracts, and Acuity has full use to develop the IP further.
The risks are either
i) end users can obtain the open source software full of bugs and not pay Acuity. I can say this is not a risk, any company buying risk management software wants supported software and doesnt download free, potentially corrupted and cyber insecure, software into their network. Open source software tends to be in the academic world and is not used in large enterprises / government bodies, what is used tends not to be "enterprise" application specific software and is very simplistic.
ii) competitors somehow utilise this software. Again I really cant see this happening, compiling / decompiling / reverse engineering is a pain in the **** - more costly and time consuming than starting from a blank sheet of paper
Software is also pretty useless on its own, you need the consultants, pre sales engineers, sales to really understand the customer requirement and make it work - the overall service wrap is the key selling point.
One final point is that most software contracts usually has a clause which idemnifies the customer from third party claims, so a customer is secure that the supplier is on the line should a third party dispute the IP in use.
In summary I cant see either counterparty doing anything as its simply not in their financial interest to do so.
You did miss out this bit, which is relevant i think to the real underlying risk.
"The counterparty’s core business is not that of a software developer or reseller neither the Company nor ARM is aware that the counterparty has sought to access the source code or exercised, or intends to exercise, any of these rights"
Sounds to me like corporate legal messed up here in the past, and your questions are reasonable. If you are concerned, I'd suggest you ask the company.
Acuity appears to have a good product STREAM in a competitive market. This offers risk management in one package and is said by management to be their USP. Good.
But why have Acuity given counterparties the ability to copy and sell the STREAM product as set out in their admission document? Now I may have missed something. I will be the first to admit that. Perhaps they have subsequently reached agreement with those counterparties to buy back these rights. But I haven't seen any announcement. This raises questions as to why these rights were sold (or given) in the first place). Who signed off these transactions? Are these people still part of management? Are any actions being taken to recover or buy back these rights? If not, why not?
The document gives reasons as to why management thinks counterparties will not use these rights. In the second counterparty case, the contract is not clear whether the right relates to software developed specifically for the project or to all of the STREAM software licensed to the counterparty. The document says "Were this counterparty to have the right to sell or to publish all of the STREAM® software as open source and exercise such right then the publishing of the source code of the software as open source would be likely to devalue the STREAM® software to a significant extent, which in turn would be likely to have a material adverse effect on the value of ARM." This is awful.
We have just had the Sunday Roast commenting on Acuity and Alan Green. Good news? Neither of the two commented on Acuity's own risk so it begs the question how thorough were they in researching the company? Not good!
Had the admission document not happened then these risks would not have surfaced. They do not appear to be published elsewhere.
Now the company may develop good sales from STREAM. But if I were a prospective customer I would be asking why have Acuity not managed their own risks more professionally? Then they would ask if STREAM has been developed up to the highest professional standards. I assume it has but the question remains.
FROM THE ADMISSION DOCUMENT - RISKS RELATING TO THE GROUP’S BUSINESS
Risks of publication of ARM’s intellectual property as open source. ARM has contractual relationships with two counterparties under which it has licensed its intellectual property, particularly the STREAM® software.
One counterparty is not prohibited from reselling or decompiling or reverse engineering the licensed software. The other counterparty has the right (but not the obligation) to publish as an open source certain licensed software (including the source code).
Happy Christmas @islandgirl, hope you rest-up and recharge for an optimistic new year.
Yeah mind blowing contracts as promised.Guess every little helps..
Warming up nicely.
Another brick in the wall….it’s building.
Strong outperform ‘24 incoming.
Can't believe it - one of my shares I've invested in actually makes the news in brief on the front of LSE!
Knowitall.
Just seen your X note on a Gartner peer review.
This is for another acuity, not ACRM.
Getting very interesting on various fronts, well done #ACRM "We are delighted that a leading cyber security consultancy has chosen STREAM® as a key tool for its own business and look forward to working with them and potentially many of their clients in the future