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Beeks Financial Cloud is predicting further rapid expansion of its analytics and artificial intelligence business after reporting record annual results and a significant increase in revenue from its newest products.
The Renfrew-headquartered technology group said analytics revenue rose from £600,000 to £4.4 million in the year to June following the launch of Market Edge Intelligence, helping drive overall revenue up 11% to £40m.
The growth marks a significant shift for a business best-known for providing cloud infrastructure and connectivity services to exchanges, banks, brokers and other financial market participants. Chief executive Gordon McArthur said the analytics division still has significant room to grow, and could eventually generate recurring revenue of up to £10m.
"It's software, so it's different from the infrastructure business," Mr McArthur said. "The pipeline is good.
"I would hope that over the next few years it becomes a £5 million to £10 million recurring-revenue business for us. It's not going to overtake infrastructure, but it's certainly a nice add-on, and it has higher margins than the infrastructure side."
While the group's core private and public cloud operations remained its largest activity, generating £26.3m during the year, the newer analytics division contributed £4.4m of revenue. Revenue from Proximity Cloud and Exchange Cloud products was £9.3m.
The figures suggest Beeks is beginning to evolve beyond the cloud infrastructure services on which it built its reputation and towards software, analytics and artificial intelligence products for financial institutions.
Market Edge uses AI-powered monitoring and predictive tools designed for financial trading environments. The company said the platform has already secured more than $10m in contract value since launch and won customers including a tier-one bank and a major North American exchange operator.
Mr McArthur said the speed with which customers had adopted the technology had exceeded management's expectations, with Beeks' position at the intersection of financial infrastructure and trading data giving it a strong opportunity to build a meaningful analytics business alongside its established cloud operations.
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The confidence comes as the company enters its new financial year with a growing pipeline of AI-related work.
Earlier this month Beeks announced a strategic investment in OmniPhi and plans to launch a new AI infrastructure offering that will allow financial institutions to run AI trading technology while retaining control of sensitive market data. The partnership is intended to help customers adopt AI without relying on public cloud providers or transferring proprietary trading information outside their own environments.
Across Beeks' more established operations, the company secured new Exchange Cloud deployments with operators in Canada, Latin America and Thailand, taking its total Exchange Cloud customer base to eight.
Annualised committed monthly recurring revenue rose 13% to £33.4m, giving the group a high level of visibility over future income. Underlying earnings increased 18% to £16.1m, while underlying profit before tax rose 15% to £6.3m.
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Shares in Beeks were trading slightly lower today with investors perhaps focused on a fall in gross cash from £7.4m to £5.4m, while net cash declined to £600,000. Fraser McDonald, chief financial officer, said this reflected deliberate investment in infrastructure required for new customer contracts, particularly the group's revenue-sharing Exchange Cloud model.
Under that approach, Beeks funds infrastructure deployment upfront and receives a share of revenue generated by the exchange over the life of the contract. The company said four revenue-sharing arrangements are now in place and both the Kraken and Australian Securities Exchange deployments have reached monthly profitability.
Mr McDonald said the underlying business remained strongly cash generative and pointed to £17.7m of contracted billings that are expected to convert into cash over coming years. Beeks has also agreed a £5m revolving credit facility with Barclays, which remained undrawn at the time the accounts were approved.
Alongside investment in analytics and artificial intelligence products, Beeks has also expanded its operational footprint overseas. Mr McArthur said the company has established a technical centre in the Philippines, with recruitment underway for an initial team of around 15 staff.