Rosslyn Data Technologies

http://www.rosslynanalytics.com/ TICKER: RDT     EXCHANGE: AIM

Rosslyn Data Technologies is a pioneering software company that dramatically shortens time to business insight from days to minutes. Their cloud platform intelligently extracts, aggregates and enriches data from multiple sources so that clients gain a single view of employees, customers and suppliers for complete and accurate self-service reporting and analysis.

LATEST REPORTS

 
Double thumbs up for new bank facility
Published: Apr 09 2019

Refinancing loans can be a tricky exercise at the best of times, especially given today’s the political impasse at Westminster. Therefore, it was very encouraging to hear this morning that Rosslyn Data Tech had managed to replace its existing £0.75m debt with a new 3 year, £1.5m secured facility from Clydesdale Bank on equivalent terms (ie interest charged to be at 7.75% plus 3 month LIBOR). 
We think this is both a positive step forward to accelerate growth and a major endorsement of RDT’s future prospects. Particularly since the company should shortly become cashflow positive, and continues to win blue chip clients (eg KLM, Diageo, BAe Systems, etc), who benefit from its proprietary big data, analytics and AI platform (RAPid). 
 
In terms of the numbers, we have held our estimates, reiterate RDT’s 12.5p/share valuation and look forward to the pre-close trading update in May. What’s more, given the rebound in Big Data stocks during the past 3 months, the firm continues to look materially undervalued on a relative and absolute basis.
 
Momentum continues to build
Published: Feb 11 2019

The pressures associated with managing its uber-complex supply chain are immense. Having to not only balance real-time ‘demand forecasts’ against detailed raw material, production and finished goods requirements. But also hit tough cost, working capital & profit targets, alongside delivering just-in-time orders to supermarkets, convenience stores, wholesalers, consumers & alike.
Consequently, these type of business are usually forced to hold buffer stock  in order to smooth out any logistical problems, whilst further suffering product wastage, reflecting inefficiencies, customer returns, obsolescence and damages. So what can be done? 
The good news is that by deploying Rosslyn’s big data, analytics and AI software platform (RAPid), large corporates can now generate multi-£ms savings. Perhaps even shaving 1 week off working capital levels, improving yields by 1% and/or reducing procurement costs by another 5%. Thus paying for the software several times over, and in double-quick fashion too.
Hardly surprisingly therefore, that RDT is knocking the ball out the park in terms of contract wins. It signed a raft of blue chip clients in H1’19 - and today announced another 3, worth £500k in total, operating in the International Logistics, Healthcare and Pharma sectors. In turn, pushing annualised recurring revenues to >£6m (vs £5.05m vs 31st Oct’18), and putting the firm within touching distance of becoming cashflow positive. 
Although our FY19 estimates and 12.5p/share valuation remain unchanged, we nevertheless note that the contracts bolster RDT’s P&L cover for this year and next. Namely, FY19 turnover and EBITDA of £7,500k (Act H1 £3,532k vs Est H2 £3,968k) and £242k (Act H1 -£290k vs Est H2 £532k) respectively, generating a +3.2% margin, and rising to £8,250k and £812k (9.8% margin) in FY20. What’s more, the stock at 7.3p trades on a frugal 2.0x CY EV/turnover multiple, representing a substantial discount to Big Data peers at 8.4x
 
Rosslyn Data technologies at the Equity Development Investor Forum, January 2019
Published: Feb 01 2019

Roger Bullen, Chief Executive and Hugh Cox, Founder explained the history and leading capabilities of RDT whose technology allows some of the most recognised companies in the world to best use their massive quantities of data to enhance their profitability.
 
Big Data expert primed for major break-out
Published: Jan 28 2019

Forget the $, € or ‎¥. Today, data is the world’s #1 currency and the lifeblood of any ambitious organisation wishing gain a competitive edge. Maximising its utility though is easier said than done - since many corporates operate numerous IT systems (incl. legacy), and are being attacked on all fronts by aggressive tech-enabled rivals (eg Amazon, Facebook, FinTech, etc). 
So what’s the answer? Well increasingly international businesses are turning to Big Data experts, like Rosslyn Data Tech (RDT) – who have combined cutting edge ‘data mining’, ‘analytics’ and ‘artificial intelligence’ into a fully integrated suite of cloud based, software applications (called RAPid). Enabling clients to not only cut costs, comply with regulations and improve cash-flows, but also enhance revenues, manage suppliers and create best-in-class supply chains.
This is proving to be a winning formula too. So much so that for the 6 months ending Oct’18, Rosslyn won a clutch of blue ribbon contracts with tier 1 clients, including a global defence organisation, a European logistics company, a UK based financial services firm and a speciality metals business. Driving H1’19 turnover up 11% (£3.53m), annualised recurring revenues (ARR) 12% higher (£5.05m) and cashflows towards breakeven. 
Nonetheless this is just the tip. We think the Big Data boom is set to deliver double digit top line growth for decades ahead 
The beauty being that – due to RDT’s 80%+ gross margins (Est FY19), 5% churn and rich EBITDA drop-through rates - a large chunk of this incremental revenue should fall straight to the bottom line. In fact, thanks to estimated LFL growth of 16.6% this year (H1 11% vs H2 est 22%) and 10% (prudently set) next, FY20 EBITDA & cashflows should move healthily into the ‘black’.
H1’19 gross margins climbed 3.5% to 78.4% (vs 74.9% LY), whilst the EBITDA loss narrowed to -£213k mirroring favourable operating leverage (on sales +11% £3.5m). For FY19, we anticipate turnover will jump 16.6% to £7,500k (vs £6,433k LY) with net debt closing Apr’19 flat at -£700k (vs -£757k Apr’18, -£451k Oct’18), reflecting tight cost control and working capital management. 
In our view there should be no reason why the firm cannot achieve sustainable 10%-15% pa organic top line growth, 22% EBIT margins and >100% cash conversion – ie in sync with the broader software industry. However we accept that our sales projections are conservative, compared to IDC’s forecasts for the Big Data market of >20% pa (on average) between 2017-22. 
With regards to valuation, employing a 15% discount rate, our DCF analysis calculates the stock to be worth 12.5p/share, offering >75% potential upside for risk-tolerant investors. 
NB investors can hear CEO Roger Bullen present the proposition on this Wed 30th at the ED Forum, registration here: CLICK HERE 

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