KRM22 plc (LON:KRM) Executive Chairman Keith Todd caught up with DirectorsTalk for an exclusive interview to discuss their latest trading update, strengthening the quality of customers, expanding the global risk platform and what we can expect from the company in the next 6-12 months.
Q1: As mentioned, KRM22’s trading update published, what are the key points that we should take?
A1: Yes, it’s been a period of progress, progress frankly on many, many fronts but it’s also fair to say probably a period of some frustrations.
On the progress front, new customer revenues of £300,000 improved the quality of the annual recurring revenue base of our customer base, and also expanded the global risk platform offerings with new partnerships and new functionality.
The frustrations are really twofold, one the amount of time it has taken to close some contracts and as we’ve said in the trading update, we have £600,000 per annum of annual recurring revenue contracts which will be multi-year contracts that we’re waiting for signature, everything agreed. Unfortunately, it’s timing is such that they don’t always fall on the right side of the half year period reporting but it does mean we’ve got a strong order book coming.
The second frustration that we had a couple of terminations, companies that had run into in one case problems financially and the other case, a change in a business approach but overall, good progress on many fronts.
Q2: What did you mean by strengthening the quality of customers?
A2: It’s a good question because it does deserve some explanation, it’s a number of aspects of it.
Our core businesses is Software as a Service so we prefer, and want in fact, customers to take the global risk platform and that platform then is a mechanism for being able to expand further offerings into that customer base. Tied with the technology is what’s called Master Service Agreement (MSA), a contract with customer whereby a particular functionality, maybe at trade market risk management might be under one order form, but the next time you negotiate with the customer, you’ve got the basic contract in place, they can take the next part of the revenue automatically.
So the second thing is about the MSA and it’s key that also we’ve, as we reported, started focusing on bigger customers, tier ones and for very practical reasons. The practical reasons are that they’ve got to many more functions they could take from us and therefore greater revenue for the company. We love all the customers, I don’t want that to be misinterpreted that we only like big customers, we love all the customers but it’s just a statement of fact that a tier one bank, over the years, will be able to get us a lot more revenue stream.
So, when we’re talking about improving the quality of the customer base within our annual recurring, it’s not only that it’s better, more secure contracts, but it’s also more expandable contracts to give us good revenue growth in the future.
Q3: Now, you mentioned earlier that your global risk platform has been expanded, can you tell us a bit more about that?
A3: Yes, so really important, as I said a few months ago, the global risk platform is the central delivery mechanism and the one gets access to what one may think of as applications that they’re authorized to get.
We’ve added additional partnerships with Waymark, a company to bring some of the compliance digital reporting to the platform, and that’s expanded the partnership portfolio that is available for us.
Also, we’ve extended right across the suite from our market risk offering, as well as our compliance and including our surveillance offering and as well as our risk cockpit, the features, and functionalities in each of those products. That then provides us more sustainability stickiness of customers, but also opportunities to grow the revenue stream with those customers.
Q4: What else can we expect in the next 6-12 months from KRM22?
A4: Well, there’s going to be a continuation obviously of the closing of those contracts which are just about across the line but most importantly, it’s the global risk platform, again, as a springboard for further growth.
We’ve got some very exciting initiatives that are coming forth, you’ll be hearing more on in the future discussions about addressing holistic surveillance. This has been a topic we’ve been around for a year or two, but we’re bringing together, I think, what is quite a unique partnership of our own products and partner products to really address fully the holistic surveillance market.
We’ve got an initiative in the AI area and I’m hopeful within the next few weeks to be able to announced that, not only from the point of view of applying AI machine learning to our own products, but also to be able to address some of the wider requirements in the marketplace.
It’d be remiss not to mention the risk cockpit, the central integration tool, really being an interesting recent period of demonstration of how we’re bringing together both management information, management tools, together with risk management, all in the integrated risk cockpit.
So, yes, a lot of growth going forward and we are looking very positively at the outlook.