KRM22 is a pioneer in the rapidly expanding RiskTech sector. 
Its talented board led by Exec Chairman Keith Todd (FFastFill), COO Karen Bach and Stephen Casner (US CEO) aim to create a Global Risk Platform (GRP) focusing on the capital markets.


Positive pipeline conversion & £1m pa cost savings
Published: Oct 31 2019

Despite the current economic and political uncertainties, KRM22 said this morning that it had made encouraging progress since the Sept interims – signing 3 new contracts & 1 renewal, alongside £1m pa of cost savings (no turnover impact) and the receipt of a £0.6m R&D tax credit.
Together this has not only lifted our FY20 EBITDA, net debt and valuation to +£25k (vs -£0.9m before), £3.06m (£4.0m) to 90p/share (or 3x FY20 ARR adjusted for minorities, vs 70p) respectively. But also, should enable the business to become cashflow positive in FY21, a full 12 months earlier than previously envisaged.
Likewise Annualised Recurring Revenues (ARR) have climbed to £4.3m (vs £4.1m June & £3.3m Dec’18), further rising to £4.4m in FY20 – representing 18% YTD LFL growth. The 1st customer, a quantitative investment firm, will use KRM22's surveillance application (Irisium) to monitor market activity to increase transparency, integrity and confidence in their offering. The 2nd, a futures brokerage in Singapore, will be the first in AsiaPac to deploy KRM22's Risk Monitor software – with the 3rd being the first Australian client to adopt the Enterprise Risk Cockpit.
Finally due to the macro headwinds, the Board has decided to postpone any large investments and M&A until 2020. Instead concentrating on organic growth, reducing overheads and shortening the timescale to cashflow breakeven.
Raising the bar in capital markets risk mgt
Published: Sep 17 2019

Monday’s huge price spike in oil following the Saudi Aramco drone attack was a 'once in a generation' event. However despite being seemingly impossible, it nevertheless cost those traders who were short crude, $millions.
Worse still, this type of ‘Black Swan’ actually happens more often than you might imagine – such as the 2016 Brexit vote, 9/11 World Trade Centre attack, Argentine bond rout (Aug’19), LTCM blow-up (1998) and the 1987 stock market crash.  
Indeed if you’re a professional asset manager, this kind of thing once again underlines why you need top-notch risk management systems to keep tabs on exactly what’s happening at the coal-face in real-time. The big problem is that many such institutions presently have a hotch-potch of legacy systems. Haphazardly assembled over time into a mishmash of point-solutions operating in discreet siloes with minimal integration. Making it almost impossible for Chief Risk Officers and/or Directors to assess a firm’s true exposure.
This is where KRM22 fits in. It is 100% focused on the Capital Markets, and is in the process of creating a ‘1st-of-its-kind’ Global Risk Platform. Not only addressing all its clients’ regulatory, market, technology and operational risk requirements, but also materially reducing their costs and complexity.
At today’s interims, the company said that it now had 37 institutional customers (vs 26 Dec’18) and delivered H1’19 turnover of £1.8m (vs £1.3m FY18). Exiting June with Annualised Recurring Revenues (ARR) of £4.1m (vs £1.0m LY & £3.3m Dec’18). Nonetheless the timings of some contracts that were anticipated to be secured over the summer, instead shifted to the right (deferred, not lost) due primarily to the less certain macro environment.
Consequently, we have reduced our FY19 ARR and sales estimates to £5.15m (from £6.67m before) and £4.2m (£5.8m) respectively - with the valuation similarly dropping from 110p to 70p/share, equivalent to circa 3x FY19 ARR. Equally though, there should be no reason why the stock can’t command (at least) a 4.0x rating; worth c. 130p/share – say by Dec’20, based on ARR of £7.25m and closing net debt of £3.96m.
Shaping up for ‘break-through’ year
Published: Jul 11 2019

The dramatic fall from grace of rock-star fund manager Neil Woodford, has been a classic case of not managing risk correctly – especially portfolio liquidity, idiosyncratic exposure and asset correlations.
Worse still Mr Woodford is far from being alone. Many other experienced investors, broker-dealers, asset managers and even institutions still have to rely on ‘gut feel’ to assess their overall positions. Largely because there is no alternative.
This is where software developer KRM22 fits in. It is currently assembling a ‘1st-of-its-kind’ RiskTech system that seamlessly connects all these risks, allowing holistic real-time assessments and data sharing. This morning the firm said that demand for its new Global Risk Platform (GRP) is “strong” adding that Annualised Recurring Revenues (ARR) had climbed 24% to £4.1m in H1 (vs £3.3m Dec’18), of which £0.3m was organic and the rest M&A (re Object+).
On top it now has 37 active customers (vs 26 in Dec’18) and is on track to achieve turnover of £5.8m in 2019, up 350% YoY. Elsewhere, costs continue to be tightly controlled – while discussions remain ongoing with strategic investors relating to a possible industry tie-up. Net debt closed June at £0.7m (vs +£2.2 in Dec’18). In terms of the numbers, we reiterate our projections and 110p/share valuation – with ARR expected to close Dec’19 on a £6.67m run-rate.
Chairman & CEO Keith Todd adding: “Our priority for H2 is to drive recurring revenue growth through our strong sales pipeline of cross-selling opportunities and by attracting new customers. We will continue to bring further applications to the GRP through investments, acquisitions and partnerships. Our discussions with potential strategic industry investors continue which we aim to conclude in H2.
Revenues forecast to climb 350% in 2019
Published: Jun 03 2019

After a relatively quiet 4 months, volatility in the capital markets has returned with a vengeance. Sending equity/crude prices lower on global growth fears and investors scrambling for ‘safe haven assets’ (eg sovereign debt).
That said, the turbulence has been a godsend for traders who make money on dealing volumes, but equally a real headache for compliance teams who are desperately trying to keep tabs on risk positions. Unfortunately many banks, hedge funds, stockbrokers et al, currently use spreadsheets or bespoke systems to monitor these real-time exposures, which typically do not communicate with each other.
KRM22 is fixing this problem with the intention of becoming the de facto standard for RiskTech SaaS solutions across the world’s exchange traded and OTC securities. Sure there is still a lot of hard work to do, yet so far progress has been little short of miraculous. In the space of 13 months since IPO, the firm has completed 4 acquisitions, signed 4 strategic partnerships, won numerous new contracts, built an expert subject matter team and launched of a ‘1st of its kind’ Global Risk Platform.
The upshot being that today Annualised Recurring Revenues (ARR) have mushroomed to £3.9m vs zero just 1 year ago. Chairman & CEO Keith Todd adding “We have made good progress in a short period, and we have a very strong sales pipeline which includes many cross-selling opportunities.”
In terms of the numbers, we believe 2019 turnover will jump by 350% to £5.8m (LY £1.23m) with ARR closing at £6.67m. Better still, thanks favourable operating leverage, targeted sales & marketing and a buoyant pipeline, ARR is forecast to close Dec’20 at £10.7m (+60%) and further rise by 40%+ pa in 2021 to £15.0m. In turn, pushing 2021 EBITDA (pre SBPs) to £1.55m, with the business being self-financing from 2022 onwards.
Ok, so how much is the stock worth? Well using a 20% discount rate and peer group multiples, we value KRM22 at 110p/share - offering risk tolerant investors >45% upside vs today’s price.
4th textbook acquisition at attractive price
Published: May 30 2019

Spending money on acquisitions is relatively simple. Doing it wisely is the tricky part - requiring expert domain knowledge, an experienced management team, strong integration skills and importantly a sharp eye for value creation.
We think KRM22 has all these vital ingredients, and today announced its 4th textbook acquisition in under 12 months. This time agreeing to purchase Object+ Holding BV for an initial $1.15m (split: $500k cash & $650k equity at 85p, or 606.9k shares), plus a $2.75m earn-out depending on future Annualised Recurring Revenues (ARR).
Object+ is headquartered in Amsterdam with another office in Chicago - generates ARR of c. $550k from 8 institutional clients - and develops P&L, margin (eg collateral) and pre-trade order limit management software. Elsewhere, the firm’s post-trade services support electronic gateways to >30 exchanges throughout Europe, North America and Asia. Whilst its leading Risk Monitor application assists clearing houses/members, traders, brokers et al, in making real-time decisions based on risk-adjusted returns.
What’s more, Object+ should shortly become profitable (vs £50k loss in 2018), and we expect the deal to be materially value-accretive given the complementary fit. For instance, KRM22 already offers post-trade market risk software. Meaning the transaction will extend and deepen coverage within the ‘pre- & at-trade’ areas, offering direct connectivity to most major exchanges. Moreover, there should be further R&D, customer and up/cross-selling opportunities.
In terms of the numbers, Object’s revenues are running at around $1.1m pa (£0.9m), of which approx. 50% is recurring. Thus putting the transaction on a modest EV/Sales multiple of 1.05x – excluding deferred consideration. More importantly, we estimate the acquisition pushes KRM22’s total ARR to >£3.8m. Completion is expected early next week.
KRM22 at the Equity Development investor forum September 2018
Published: Oct 03 2018

KRM22's management Keith Todd CEO, Karen Bach COO, and Stephen Casner CEO Americas discuss their most recent acquisition and placing in RegTech, and the progress made in the first 150 days of listing.â€
'Huge' opportunity ahead in RiskTech
Published: Sep 26 2018

KRM22 is a pioneer in the rapidly expanding RiskTech sector. Its talented board led by Exec Chairman and CEO Keith Todd (FFastFill), COO Karen Bach and Stephen Casner (US CEO) aim to create a Global Risk Platform (GRP) focusing on the capital markets.
Its USPs will be real-time reporting/evaluation, a state-of-the-art ‘risk cockpit’ covering all major areas and superior risk management software at a fraction of the overall cost. 
Rome wasn’t built in a day, and neither were the $100+ trillion global capital markets. However for Risktech pioneer KRM22, things are certainly taking shape in double quick time. Developing its proprietary Global Risk Platform (GRP), assembling a crack team of software engineers and expanding into new territories. Meanwhile on the M&A front - after IPO’ing on AIM in April at 100p/share, raising gross proceeds of £10.32m (£9.8m net) – the Board even managed to fit the purchase of a 60% stake in London based Irisium in June from Cinnober (9.7% KRM22 shareholder) for an enterprise value (EV) of £3,057k (ie cash/debt free, including a £0.6m earn-out). 
Shortly after completion Irisium signed up its 14th customer (operating in crypto-currencies), lifting group annualised SaaS revenues to c. £1.1m. Over the past few years digital currencies have been greatly cleaned up, with Bitcoin Futures now traded in many countries. Hence requiring national authorities, exchanges and brokers to adopt applications such as Irisium’s to help police these alternative asset classes.
Going forward, we understand management have identified 50 other potential acquisition targets, of which discussions are ongoing with several. This is interesting because in our view, the RiskTech sector is populated by far too many sub-scale tech-rich startups (<£10m in turnover) that would benefit by being part of a much larger and better funded entity.
In fact, right on cue came news yesterday at 3.30pm that the company had acquired Prime Analytics (PA), a Chicago based risk management software firm, for a maximum price of $7.5m - split $3.5m cash & $1.0m shares (at 101p) on completion, along with a 2 year earn-out worth up to $3.0m based on year 1 & 2 revenues. The upfront consideration is being funded via a placing of 3,282,634 new shares to raise £3.32m at 101p (equivalent to a 33% discount to the closing price on 24th September).
Yesterday’s H1’18 numbers saw adjusted EBITDA (ex SBPs of £158k) come in at -£869k on sales of £73k, with June closing gross funds of £6,945k, or £6,357k net. Looking forward and assuming things go to plan, by 2020 we see no reason why KRM22 shouldn’t be able to achieve recurring revenues of >£20m pa. Which, based on average FinTech multiples of between 4-6x EV/sales or 20-25x EV/EBIT, would imply an enterprise value of £80m-£120m vs £21m today.