It's been a good year for company seminars and I'm pleased to report that this is my 7th seminar of 2016. I may not have invested in all of the companies that have presented but I've certainly learnt a lot about them and worked out which ones tick the box for me as an investor. While this is the final Sharesoc seminar of the year I'm already looking forward, in anticipation, to any companies which the small but effective Sharesoc team manage to sign up.
Redstoneconnect
Smart buildings are the future, according to CEO Mark Braund, and following his presentation I can see why they're attractive to clients. The problem with ordinary buildings is that they're a fixed asset designed for a relatively static workforce living in a cheaper world. Now, with employees much more mobile and networked across larger organisations, the inefficiencies of the old model are apparent. Redstoneconnect solve this with OneSpace; an end-to-end space utilisation, management and analytics platform that allows customers like UBM to reduce energy consumption by 57% while increasing their headcount by 28% in the very same floor space. That'll be why top-name clients like JP Morgan, Goldman Sachs and Amazon are using their software.
Now this glowing picture is somewhat at odds with the share metrics available on Stockopedia. This is a proper penny-share which has existed for over a decade without turning much of a profit or building a viable business. This is why Mark Braund, along with CFO Spencer Dredge, found himself brought in to turn it all around in July 2015. A two-pronged approach involved ridding the company of legacy issues, such as an unrelated animation outfit and an onerous lease, while focusing on a future involving system integration and managed services in the smart building sector niche.
So far the plan appears to be working with customers coming on board and margins improving. The latter is a clear target for Redstoneconnect as 60% of their revenue derives from system integration, which is both lumpy and low margin, while the remainder comes from services and software - both of which generate high margin, recurring revenue. So the business plan is to create a more profitable mix, rather than go for revenue growth, with the entire company being taken over in 2-3 years by a competitor in this fragmented market. To achieve this Mark Braund needs to…
