Insights on Two High Beta Software & Computer Services Stocks: Defenx PLC and Blue Prism Group PLC

                                                                                                 

Defenx PLC

Defenx PLC (LON: DFX) provides network security solutions with a wide array of products for personal computers and mobile devices, providing the clients with protection against data loss and cyber-attacks. The company has solutions for both personal and business use.

These days our cell phones and tablets have become an integral part of our life as they support various dimensions to experience everything in a very convenient manner. We can buy, share and browse the internet irrespective of the location constraints. Also, with artificial intelligence and machine learning being embedded in the new smartphones, these devices can now record data with respect to our likes, dislikes and preferences or anything we stumble upon the web. In addition, the mobile also stores images, important data, banking applications, relevant details and many more. As these devices provide us convenience, they are also subjected to various threats and risks which can negatively impact our privacy and hard-earned money. Therefore, it is imperative for us to have a security solution and data backup option for these devices. Defenx Mobile Security Suite is a solution offered by the company which can protect these devices against network attacks, malware intrusion and data protection.

NAS (Network Attached Storage) antivirus, also known as Seagate Antivirus is a popular product of the company which provides protection against viruses. Another useful offering by the company, Defenx Cloud Backup provides backup for all the documents, images and financial information and can be integrated across multiple platforms such as Windows, Linux and Apple computers.

The company also have a product offering for business users, it provides integrated solutions for small and medium enterprise (SME), which safeguard the network against viruses, spyware, spam and eliminate threats successfully. In case, the data is lost, stolen or gets corrupted; the product has the option of restore points which can help with data backup and data consistency which can help in carrying out daily tasks of the clients without hampering the business continuity.

DFX-Recent News

The company has proposed the cancellation of ordinary shares to trading on the AIM market of the London Stock Exchange, which is subject to approval from shareholders.  The cancellation will only be exercised by shareholders consent in terms of voting equal to or greater than 75 per cent. It is important to note that BV Tech S.p.A has a majority shareholding (67.1 per cent) in the company and has shown interest in the proposed cancellation. The company looks forward to a press release in November, detailing the cancellation, which is expected to take place any time between December 2019 and January 2020. Strand Hanson Limited will continue to serve as the company’s Nominated Adviser until the cancellation and will take care of the implementation of the cancellation.

DFX-Business performance for H1 FY19 period ended 30th June 2019

(Source: London Stock Exchange)

The fiscal year 2018 had been a reboot year for the company, following which the company entered into an agreement with its majority shareholder, BV Tech for distribution of software. The BV Tech has paid €1.0 million to buy the exclusive right of selling Defenx products in Italy and committed to making a minimum purchase of €1.2 million of Defenx’s products, which will be received in instalments during 2019-20.

The company’s revenue was recorded at €1,501 thousand in the first half of 2019 due to recognition of the Distribution agreement. The company’s gross profit was recorded at €904 thousand in the first half of 2019. However, the company still reported a loss before taxation of €76 thousand during the period. The cumulative comprehensive loss of the company was €111 thousand during the period.

The company aims to invest in upcoming technologies which can be fruitful along with next-generation products for private and corporate users of mobile devices, tablets and computers.

The Group continues to be reliant on the financial support of BV Tech, which will serve as the marketing and sales partner and will take care of contractual agreements. The company might further dig into losses for the full year as sales in the second half of 2019 are far behind the sales of the first half of 2019.

DFX-Share price performance

Daily Chart as on November-22-2019, before the market close (Source: Thomson Reuters)

On 22nd November 2019, at the time of writing (before market close, GMT 9:59 AM), Defenx PLC was trading at GBX 1.10, down by 24.13 per cent against its previous day closing price. Stock’s 52 weeks High and Low is GBX 9.80/GBX 0.31. Stock’s average daily traded volume for 5 days was 1,194,838.60; 30 days – 408,260.97 and 90 days – 202,295.90. The average daily traded volume for 5 days was up by 192.67% as compared to 30 days average traded volume. The company’s stock beta was 6.10, reflecting much higher volatility as compared to the benchmark index. The outstanding market capitalisation was around £561.67 thousand.

Blue Prism Group PLC

Blue Prism Group plc (LON: PRSM) is known for automating robotic processes, empowering blue-chip companies to create a digitally advanced workforce powered by the company’s robots, who are driven by software to automate day to day administrative and general tasks which are required at back-offices. The company offers software licenses and provides training and professional services depending upon the project requirements. The company provides tailor-made solutions for the implementation of cognitive technologies and embedding Artificial Intelligence (AI).

PRSM-Trading update for FY19 period ended 31st October 2019

Significant acceleration in sales of the company resulted in a very strong full-year performance in the second half of the year. The sales volumes remained high and with increased deal sizes which resulted in more businesses generation this year. The company has an impressive order book as compared to previous years as the group progresses in 2020.

685 net new customers were acquired by the company during the financial year 2019 with a customer retention ratio of 0.96. The company’s total customer base increased by 69 per cent to 1,677 as on 31st October 2019 as against 992 in 2018. The existing customer base resulted in 1,139 upsells into 544 customers, which shows the upselling potential of the company and software’s scalability during FY2019.

The company’s sales momentum translated into a solid performance in the form of upsells and renewals and total contract value from new customers of £181 million in FY19 as against £143 million in FY18. The increase in deal sizes, specifically with upsells, the company generated £115 million in all the key geographic regions in the second half of 2019.

The company looks forward to recording revenue of £98 million in FY19 as compared to £55.2 million in FY18. The company’s cash position stood at £74 million in FY19 as against £50.5 million in FY18.

On 23rd January 2020, the company is expected to report its financial results for the year ended 31 October 2019.

PRSM-Business performance for H1 FY19 period ended 30th April 2019

(Source: London Stock Exchange)

The company reported adopted IFRS 15 standards in 2019. However, for ease of reconciliation, the results were presented in IFRS 18 standards as well. The company’s revenue surged by 82 per cent to £41.6 million in the first half of 2019 as against £22.9 million in first half of 2018. The company’s total customers have almost doubled to 1,337 in first half of 2019 as against 700 in first half of 2018. The total number of employees of the company rose by 2.5 times to 703 in first half of 2019 as compared to 273 in first half of 2018.  The company’s net cash surged by 137 per cent to £129.4 million in the first half of 2019 as compared to £54.6 million in first half of 2018.

PRSM-Share price performance

Daily Chart as on November-22-19, before the market close (Source: Thomson Reuters)

On 22nd November 2019, at the time of writing (before market close, GMT 10:03 AM), Blue Prism Group Plc were trading at GBX 1,297, up by 11.61 per cent against its previous day closing price. Stock’s 52 weeks High and Low is GBX 2,030.00/GBX 774.25. Stock’s average daily traded volume for 5 days was 533,382.20; 30 days – 324,086.23 and 90 days – 416,731.98. The average daily traded volume for 5 days was up by 64.58% as compared to 30 days average traded volume. The company’s stock beta was 2.62, reflecting higher volatility as compared to the benchmark index. The outstanding market capitalisation was around £942.07 million.