Acuity RM Group (LSE:ACRM) — Final Results

0:00 Good morning, and welcome to the ACUITY RM GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time by the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to the management team. David, good morning, sir. Good morning. Thank you, Lily. Welcome everyone to this presentation on ACUITY RM GROUP. I'd like to spend the next twenty minutes or so explaining why we are such a good investment for you. First, Duncan and I will introduce ourselves. My name is David Radjukovic, CEO of ACUITY RM GROUP.

0:52 I've been CEO since December 2024. Prior to my experience with ACUITY, I've led an ed tech SaaS so b to b SaaS business through two highly successful private equity exits. I'm looking forward to doing the same here with ACUITY RM GROUP. I have a MBA from University of Exeter, and I've spent the last fourteen years or so building b to b SaaS companies. At this point, I will I'm Duncan Harper. Duncan. Hello. I'm Duncan Harper. I'm the finance director. I joined ACUITY back about six six or eight months ago back in November 2025.

1:39 I've got twenty five to thirty years experience as finance director of various service business, including a previous AIM business and most recently a a large regional law firm. Great. Yeah. Since Duncan's joined us, he has transformed the finance function. So I think we are in good hands. Thank you, Duncan. I'll just do a quick whip through of the business. So we, as as most of you know, we're an AIM quoted cybersecurity, GRC software group. Cyber GRC, the way I like to think about so it's governance, risk, and compliance. The the the market that we're in is one that is growing.

2:25 So as many of you who pay attention to the business news have seen, there have been a number of cyber attacks, and the the number and frequency and the quantities involved in these cyber attacks have only increased over the the the past couple years. So we are certainly in a growing market with a with with a well defined need. In terms of where we are, so we've got our Stream Classic product, which I'll talk to you more about later on. This is our well established product. We've also launched an easier to use, lighter weight version of of our Stream Classic product aimed at a different customer segment, which is called Stream Cloud.

3:12 The business is heavily weighted toward recurring revenue. We've got a very sticky blue chip client base, so we are prominent in The UK public sector. We have utility, health care, manufacturing clients across, three different continents. There's a there's a couple of things I'll point out here, and that is so so I've mentioned we have subscription revenue, and much of it, even including our consultancy, is paid upfront. So, essentially, our new sales convert to cash quickly. And and in in most cases, our the marginal cost of serving those clients is quite low.

3:59 So it doesn't take a great deal to actually, inject some cash into the business, which we plan on reinvesting and growing this into a great company. One thing that may get lost if I don't point it out here, and Duncan will talk more about the results later, but we took a business that in 2024 lost over £1,000,000 into one that made an operating profit in the second half of twenty twenty five. So this is the story of a, of a turnaround business, and we've only got further up to go, and and we'll be scaling this business even further. I talked about our blue chip customer profile.

4:44 The other thing that I'll point out in terms of our customers is we do have a strong second half of the year public sector pipeline, which I'm very excited to to start closing deals. The yeah. In terms of our capital structure, we have a clean balance sheet. One item that I'll point out here that is worth noting is that our forward contracted revenue is 2,000,000 2,100,000 in quarter one, which is up from the previous quarter. In terms of our revenue base, we've got a strong foothold in The UK, particularly in The UK public sector and defense contractors. As you'll note from my my previous remarks about the cyber GRC market, it is growing, and it's certainly growing in terms of, public sector and defense and defense contractors. In fact, the, defend defense investment plan just came out yesterday, and there's certainly good news for us around that. There'll be an increase in defense spending.

5:54 That defense is not only for fighter jets and submarines, but it's also for cybersecurity, which is something that will will benefit us. So the the most of our remaining revenue other than The UK comes from Mainland Europe. So UK and Europe are really where we see our focus, especially given all the regulatory pressures that European companies are now facing. And we do have a foothold in The US. So I think so as we develop our our strengths in The UK and in Europe, we will look to expand to The US. The first stop though, however, is is certainly the Mainland Europe and and The UK.

6:40 As I mentioned previously, our 86% of our revenue is recurring subscription revenue. This is stickier. This is not one off consultancies. These are these are software programs that are supplemented by consultancy, and it's it's quite a sticky, revenue base. We do work mainly with regulated sectors. So beyond public sector and defense, we have companies in health care and manufacturing, etcetera. The majority of our contracts are multiyear, so it's it's, again, quite a sticky customer base. We do have a strong second half of the year pub public sector pipeline, which was only aided by the report that came out the other day.

7:33 Gonna hand it over to Duncan to talk through our 2025 financial performance. Thank you very much, David. So, we published our, final results for the year ended December 25 on Monday morning. We also made a regulatory news announcement at that point, And a a also a full copy of the annual report is available from our our website. So in terms of the highlights, David's already mentioned the revenue. So the revenue, was stable at 2,100,000. There were some client wins last year, but there were also a few nonrenewals of some legacy software legacy clients. I think, well, the the renewal rate has has improved substantially during the current year.

8:24 I think some of those nonrenewals were because at that point, we weren't able to offer the StreamCloud product. We now are and later in the presentation, David is gonna talk a lot more about our product portfolio that we now we now have and are developing. In terms of operating cost, David has also mentioned that we've put a huge amount of effort into reducing the costs and bringing the business onto a more sustainable basis. We've taken the better part of £1,000,000 out of the operating cost base last year, and there's a bit more savings to come through this year as the full year impact of those savings comes through during 2026. That's obviously had a transformational impact on the operating results where we've gone from 2024 making a loss operating loss about over 1,000,000 to being much, much closer to breakeven during 2025.

9:26 The way I describe this is 2025 was a year of consolidation, putting the business onto a more sustainable footing and then now being poised to grow the business with the new products. In terms of the financial position, the the business has very little debt. There's just one remaining c bills loan, which repays at about 6,000 a month for the next twelve months when it's been fully repaid. And that's the only debt the business has currently. We're we're we're all pretty much all equity financed. Okay. So handing back to David. Great. Thank you, Duncan. I'll just talk a bit now about the purpose of our most recent fundraise.

10:12 So one thing that's important to know, we were oversubscribed, which is which is very heartening to see that our investors see what we see from the inside and the fact that we have a huge opportunity to grow right here in front of us. So where are we gonna use these funds? Number one, we're gonna be developing a a whole new AI native product that will change the way CyberGRC is done. The other main element here is that we are going to be adding some very talented people to our sales and marketing team. In particular, we have an individual who'll be who'll be joining us shortly, managing our channel partnerships, which we feel will unlock steady and even beyond steady growth in the in the in the months and years to come.

11:11 We've added in marketing. We'll be adding in sales. This fundraise will allow us to do that. We also have a bit, from from working capital. The main thrust of the investment, however, will be in a completely new product that will be going to where the cyber GRC market will be rather than catching up to where it is today. In terms of our current trading, so we had 441 k of revenue in q one, which is solid. We ex we certainly expect to increase that as we as we close out the year. We did have a a solid quarter in terms of the the the amount of contracts won, including new contracts in The UK public sector and a North American bank.

12:05 One of the key things that I wanna point out is, especially given our losses in 2024, is that we have been profitable every month since October 2025. And that has been in terms of our operating profit. So that's been quite an achievement, and and now we're poised to scale the business even further. So our forward contracted revenue was 2,150,000, which is higher than the previous quarter. Duncan spoke a lot about our cost reduction. So last year was was really about cost reduction. That will flow through into this year as well. Only this year, the focus now becomes on scaling the business to new heights. And to that end, so we've launched our our StreamCloud.

12:56 We've added some new customers. We've conducted market research, and we understand the cyber GRC market deeply and where where it's going to be going. In terms of our product portfolio and road map, so our Stream Classic product continues to be a cash cow for us. So the this can be deployed both on premises and in in SaaS instances. And many of our UK public sector clients use the on premise, which is our most secure product, and we are one of the few that offer such a competitive product on premises.

13:43 We've launched our vendor management hub, which automates third party risk management, and it it's a questionnaire management program for for suppliers. It's very easy to use. It's very intuitive. We have clients on it, and we may even look in the future to combine the vendor management hub with StreamCloud. That's something that that we're looking at. But the the important thing is that we've we've launched a product that will help clients start on their journey to third party risk management, which is very much in focus in the cybersecurity world at the moment. We've also launched our StreamCloud product, which I will go into more depth in in just a moment.

14:32 What I will say is that StreamCloud will allow our partners to be able to to sell, implement, and get their clients excited about in addition to us having to to go and and sell ourselves. So this this gives us a more scalable, model that has only recently been launched, and we're only scratching the surface in terms of the potential. We've also unlocked a new market segment, so the mid market segment of high we're in highly regulated industries. In terms of risk OS, the one key line that I want you to remember is that standard GRC or how GRC works now digitizes risk management.

15:21 RiskOS or native AI product automates risk management, which is an important distinction and gives much greater value to our future clients. It's important to note, RiskOS is in prototype, so it's not yet launched. It's not a fully functioning system. However, we have done a great deal of work already to get it to to understand the market and know what we need to build. In terms of StreamCloud, this is a fully SaaS version of our prune or a proven StreamClassic product. It's built for a different market segment. We're not cannibalizing our Stream Classic clients, but rather we're serving an additional customer segment. So this is the mid market, which we're defining as 1,000 to 5,000 employees in highly regulated sectors. One of the key areas that we're going for is DORA, so Digital Operations Resilient Act compliance, which is an important regulation for mid market financial institutions.

16:36 In the past, they haven't had to pay as much attention as they as they currently do and as they will going forward. StreamCloud allows us to get customers that want that wanna move off of spreadsheets and do something that is very intuitive and easy to use and get set up in a matter of hours or maximum days and start getting value. I mentioned the the StreamCloud is much more easily deployable by our partners, and it doesn't require a great deal of overhead in terms of on our end to be able to implement it. Why does this matter? Again, Stream Classic is very good for The UK public sector and for organizations that are mature in terms of their risk management.

17:30 So if you have complex processes and you require complex automation, Stream Classic serves you well. Stream Cloud is for those that are that are relatively immature or middling in terms of their maturity level, and it allows them to become even more organized in their cyber risk management efforts. Where we're very much excited and the key driver for this fundraise was risk OS, which is the AI native future. I'll repeat the line that I mentioned earlier where standard GRC, how it's currently constituted, digitizes risk management.

18:19 RiskOS automates that risk management. So I'll go into a bit more detail in just a moment. What I will say is we've done our market research. We've talked to a number of people in industry. We've combined that with our own insights and knowledge of AI, and we now understand what we need to build. Of course, it will evolve as we go through the building process. No software company no successful software company, I should say, builds some or just go sets out, builds something, takes six months to a year, and in the end, they come up with something that may or may not meet the market need. On the other hand, successful companies are continually adapting what they're building even as they're building it so that we're a 100% sure that it hits the market need.

19:15 And that is exactly what we're doing with RiskOS. It's AI native from the ground up. And so what differentiator does that give us? Standard GRC records what you're doing. It shows the controls that you've put in place. It assesses those controls, assesses the risk. RiskOS provides an intelligent leader that tells you what to do. Even with so within human controlled limits, it's not we're not setting an agentic AI loose on all your data without limits, but RiskOS will eventually even execute autonomously cyber GRC, meaning it can close vulnerabilities before humans are even aware that they existed, which is exactly what's needed in today's cybersecurity environment as AI is used by bad actors to conduct breaches into into even even smaller organizations than they ever have.

20:26 The other element to mention is that there is a wide range of surface area to attack. RiskOS will orchestrate all of your cybersecurity efforts across the organization, which is not to be underestimated. And it will do so in a manner that is much faster than any group of humans could manage it. And that's what we mean by AI native, and that's why RiskOS, we believe, will be a huge success in the market. It's absolutely something that is top of mind for many organizations and something they need to do. We're targeting the launch in q four of twenty twenty six.

21:14 Gone are the days in software where you spend even six months or a year building software. You bill it rapidly, you iterate, and you get it in front of clients as quickly as possible and then continually improve. That's what we're gonna do with RiskOS, and that's why we are building for the future of Cyber GRC versus improving on how it's done now. That's all for my presentation. Open to answering any questions that you may have. Yeah. I can see that a lot of people have have submitted questions. We'll work through I'm not sure we'll get through all of them, but we'll we'll work through quite a quite a quite a few of them.

22:03 So the the first one that I was gonna ask was says the vendor management hub appears to solve a growing supply chain security problem. How large do you believe this opportunity could become within your overall product portfolio? I believe that together with StreamCloud, it could potentially become a large opportunity, and I'll tell you how I see that happening. There are many consultancies out there tasked with supplier assurance. So assessing their suppliers' cyber risk management policies and procedures, and then helping them to remediate those gaps in their cyber risk management.

22:52 And that's where the the vendor questionnaires combined with a remediation workspace could serve as a very valuable tool for these consultancies who are already helping with this very problem of third party risk management. So I see through our channel partners, I do see a a large opportunity for vendor management hub combined with the functionality of StreamCloud. Okay. That's that's a good answer. The the next question says, are organizations moving from reactive cyber compliance towards towards continuous risk management?

23:37 I think they are, but I'll I'll let David in a moment. And how well is your platform positioned for that that shift? Do you wanna talk about that for a minute or two, David? Sure. Absolutely. So, yes, they are very much moving away from reactive and also related to that, compliance is no longer about passing an audit once a year, it's about proving that you can continuously monitor your cyber risk posture. We've already made steps in that direction. You're gonna say something, Duncan? Sorry. No. No. Carry on. Okay. We've already made steps in that direction for Stream Classic. So we as we've continued to build out Stream Classic, we've brought in a vulnerability management system, which will as vulnerabilities are detected, they will send data into Stream Classic that will then update your risk profile. So if you if there is a vulnerability against a particularly valuable asset, meaning particularly valuable data, think pharmaceuticals IP, so intellectual property for for a drug or a medical device, Stream Classic will already alert the relevant people to the the higher level of risk and allow them to take action to

25:10 close that vulnerability before it becomes exploited by a bad actor and that pharmaceutical company suddenly loses their intellectual property to a competitor or a bad actor using it for for some of the some other purpose. So that is one that is what that's happening now. RiskOS in the AI native future takes that to a whole different level in terms of being able to do that at a much lower cost and being able to do it even faster and at the speed of AI versus at the speed of human reactions, which we're currently dependent on right now. So that's that's another distinction that provide that shows the value that risk OS will eventually bring even though we are already moving that direction in in in terms of Stream Classic.

26:08 Okay. We've had another question asking how many staff including directors does the group have today, and I'm happy to answer that. We've we've currently got 14 people on effectively on the pay on the pay on the payroll. And in addition, we have another three freelancers. So that's about 17 staff as things stand. That's obviously having taken the cost reduction efforts that we took on we went through last year to try and right size the cost base of the business. Our model going forward is very much when we need additional skills, experience, knowledge, etcetera. We look to bring that that in more on a freelance basis or on a consultancy basis to manage the manage the cost base the best the best we can.

27:01 Did you wanna try add anything to that, David? I will add to that. So we have used fractional personnel to a greater degree because the level of talent that we have access to is much higher for a reduced cost. So I think the talent level we have in the organization now versus what we had a year and a half ago is a completely different story. So that's that's where those the the fractional people fit in here. Okay. We've had another question asking what we think the top risks to successfully growing the business are. What would what would you say they are, David? The top three risks. That's, yeah, quite a difficult question on the spur of the moment. I will say that, yeah. I there there are of course, there are risks.

28:00 They're related to personnel. I'm sure it would be would be one of them. The the public sector suddenly going dry would would certainly represent a risk. However, with the defense investment plan that's just been released, that is highly unlikely to happen. In fact, the opposite is happening. And the yeah. There's there's always risk in entering a new market. There's all I prefer to look at it as a as a massive opportunity. So we haven't had products that work well in the mid market private sector until recently. And now with StreamCloud and eventually with RiskOS, we'll have a problem we'll have a solution that knocks the problem out of the park.

28:51 Yeah. I think it's I think it's fair to say that there there are there are a number of things we have to do to get the the the growth going in the way we we we expect. But we have plans to overcome this. So we need to get sales motoring, and we've we've got lots of plans that we're implementing to deal with that. We need to successfully complete the risk OS development, but we've got a lot of faith in the route that we're taking to go through that development. So all the the I think it's fair to say the big risks that we see, we are working very hard and have a plan to manage those risks. Okay. We had another question about asking whether we could guarantee there'll be no future equity fundraisers over the next twelve months because we obviously have raised money on a number of occasions in the in the past.

29:45 I think the answer we give to that is that whilst we can't make any guarantees, it's not our current intention to raise any further equity for the existing business. Our business plan shows that shouldn't be necessary. However, we are continuing as we've announced to look for suitable acquisition opportunities. And if we find one, it probably would require an element of equity financing as part of that part of that acquisition. So I think that's probably the fairest answer I can give I can give to that. That I think covers the the most of the questions that we've been we've been asked. So I was I was intending to call a halt to the the q and a session at that point unless there's anything else that you wanted to wanted to add, David.

30:34 No. Thank you, Duncan. That's great. Thank you for answering those questions you can from investors. And, of course, the company can review all questions submitted today, and we'll publish those responses on the investor meet company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, David, can I please just ask you for a few closing comments? Sure. I did wanna share with you the the enthusiasm that I have for this business. So to to give you a story about it, we've got this sticky, solid revenue base. And now we've got some investment that is possible to take the business even further. We've only recently launched StreamCloud, and we only will be launching RiskOS in the coming months.

31:23 So from here, from that sticky customer base and that ability now to invest in sales and marketing, plus fully launch and bring to market a couple new products that are serving an underserved market segment to this to this date. It's a very exciting time for the business. I don't want everyone to to kind of feel this is the same old thing because it is a completely transformed business. We've shown that in the financial results, and we've shown our ability to launch a new product in StreamCloud in a relatively short period of time. And the future I wanna convey my enthusiasm for the future, and I I hope that that has come through in the presentation.

32:13 And I appreciate all of you taking time out of your day to to watch this and interact with us, because I I absolutely love communicating with investors. So thank you all. That's great. Thank you for updating investors today. Now please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good morning to you all.