Drumz plc share price, company news, analysis and interviews

Drumz plc (LON:DRUM) Chief Executive Officer Angus Forrest caught up with DirectorsTalk for an exclusive interview to discuss its largest order to date for its portfolio company, Acuity Risk Management, what developments have been made and the outlook for the business.

Q1: Now, there’s been a couple of contract announcements recently but nothing before that, is there a reason for the sudden upturn?

A1: We have been winning contracts regularly over the past six months and we win contracts every month but these contracts, the order value for the company is £620,000 over three contracts and this is substantially in excess of anything company’s ever won previously.

So, it is newsworthy, both the number and the value of the contracts.

Q2: What developments then have been made since Drumz invested?

A2: Well, we take the holistic approach to a business, that each components of the business contributes to its success, nothing on its own really is going to make a tremendous amount of difference.

So, in the sales and marketing, which is where we have been involved, we’ve worked on commercial terms so the pricing, the contract terms, that was the first element.

The second element was to increase demand, we’ve changed the way that the company’s marketed itself, we’ve used some more model technology. The result is the sales pipeline by November, was three times the level of the year before and now further 50% increase and those are all qualified opportunities.

The next thing is we’ve invested in people, we’ve got more salespeople, in December 2019 it had one salesperson, we’ve now got five. Three have started relatively recently, so not completely productive, but they’re all looking as if they’re going to be productive.

We’ve enhanced the product, from a product which will be used by a subset in a company, typically the Chief Information Officer’s department, to something which can be an enterprise-wide solution. That not only offers us opportunity of higher prices, but it expands the market and can appeal to the largest company and we compete directly now against all our competitors.

Then there’s been better management, I think, of the sales and marketing function and it’s been more appreciated within the business.

Q3: What is the outlook for the Acuity business then?

A3: Well, in previous years, quarter four was the highlight, it always did much more than previous quarters and Q1 was low point. This year, Q4 will be significantly stronger than any previous quarter that the company has ever had so the outlook is that Q1, starting next month, is at least going to be as strong as this one.

We’ve got more salespeople, more on-stream capacity, the company has always had good technology and subject matter expertise and it has a competitive advantage, speed of deployment, which is dramatically better than our competitors. We can deploy in a month, many of them take months, if not more than a year to deploy and we have a sales engine, which is going well, with opportunities to grow, not only next month but throughout the next quarter and probably the following quarter.

Drumz plc (LON:DRUM) is an investing company whose policy is to invest principally but not exclusively in the technology sector within Europe. On 4 September 2020, the company made an investment in Acuity Risk Management Ltd, which operates an award winning software business specialising in risk management. 

Drumz plc (LON:DRUM) Chief Executive Officer Angus Forrest caught up with DirectorsTalk to discuss Acuity’s upgraded STREAM product, the changes made, what opportunities this brings to the company and what investors should be looking out for.

Q1: You announced that Acuity Risk Management, a company in which Drumz has a 20% holding, has upgraded its STREAM Integrated Risk Manager software product. Can you just remind us what the STREAM platform does?

A1: Simply, it assesses risk after consideration of a whole series of factors which are measured and impacted on the business. The most common use for STREAM is cyber security, measuring and looking at all the factors that would impact a company or other organisations, cyber security risks.

The product itself is very powerful and continues to calculate very sophisticated algorithms in real time to identify where risks are for an organisation and that is obviously increasingly important in today’s environment, particularly in cyber security.

Q2: You announced there were two major changes to the platform, can you just talk us through them?

A2: Acuity’s STREAM product has been used by the Chief Information Officer or Chief Risk Officer and their organisations within an organisation.

The new product enables the product to be deployed enterprise-wide, our three biggest competitors have products which are deployed enterprise-wide and we now are able to compete directly with them but we also have considerable advantages in speed of deployment. Our pace of deployment is you can have a fully working system up in a month compared with some of our competitors which may take 24 months to deploy. It’s also easier to deploy, a company could do it itself but most use to buy some consultancy from us so that’s number one. It would also enable us to charge commensurate charges to that that compete with our competitors so higher charges.

The second is integration with Microsoft Azure, that enables the product to be hosted anywhere on the globe which is increasingly important as there are legislative requirements for data storage. Also, there are territories where people would choose not to store their data if they could store it elsewhere. So, it enables the product to be used much more widely and we can probably charge higher costs and we can compete with the leaders in the world.

Q3: I guess that leads me to the new opportunities that this brings, what can you tell us about them?

A3: We currently have a sales pipeline which is bigger than we’ve ever had before, we have a presence in the UK and presences in North America and Germany. All three territories present tremendous opportunities for Acuity, now it’s got a product that’s competitive in the market, it can compete for every opportunity. These opportunities are measured in billion of pounds or dollars each year and the market is growing at 20% so it’s a really big step forward.

We are constantly trying to improve every aspect at security but it should enable to win contracts which are valued at two or three times the value of present contracts.

Q4: Finally, what’s next for Drumz? What should investors be looking out for?

A4: I’d like to concentrate on sales and marketing, I did say yesterday that there’s a new website and that is evidence that something is happening. The company itself regularly wins awards, the website is a place it can demonstrate its attractiveness and that both drives new business opportunities and it also creates assurance for companies that are considering Acuity.

Behind the scenes, we have strengthened our sales force in the last year, our sales force is now four times as big as a year ago and we are looking to develop in overseas markets. I think the other thing which ties in with the new product is we have got some launch customers for the new product and that’s important because once it’s seen to be working well in various industries, that will make it much easier to win more business.

The whole effort behind Acuity now is to drive the scale and growth rates at the same time as making improvements to our competitiveness throughout the business.

Drumz plc (LON:DRUM) Chief Executive Officer Angus Forrest caught up with DirectorsTalk for an exclusive interview to discuss their latest portfolio update, the 20% holding in Acuity Risk Management and strong growth.

Q1: Angus, Drumz just published a portfolio update announcing a 20% to hold it in Acuity. Why did you choose to invest in Acuity?

A1: We chose Acuity, we’ve been following it for about two years and the directors of the business had set it up, having sold a consultancy business, which they’d run for 10 years and sold it very successfully. They really know about the subject and Acuity had won a number of awards and has got some stellar customers & we think that the risk management is a very interesting and growing market.

Very importantly, the directors are people that we would like to work with, they’ve got integrity, they’re hardworking and ambitious and we felt that we would work well with them & that our skills would make a difference to enabling Acuity to exploit its market opportunity.

So, all of those things about Acuity & it’s a SaaS-type product, and SaaS type products have two critical things when it comes to valuation, one is scale and the other is growth rate. We felt that we could impact the growth rate which would also impact the scale and if you do that, you just transform the value and it’s to the benefit of both the company and the other shareholders in Acuity.

Q2: What changes have been made at Acuity now?

A2: Well, the first things that happened, and these all relate to sales and marketing and commercialisation of the business, that was a review of how the business was run, we reorganised the business model, we introduced a new prices, longer contracts and a number of other similar types of ways to enhance how Acuity traded with its customers.

The second thing we did was we strengthened and focused the sales efforts, particularly focusing on existing customers and in the short term, existing customers will prove to be most companies quick wins for growth. The other thing we’ve been working on is partners so, we’ve been selecting partners for longer term growth, partners have the ability to offer a multiplier effect in markets or sectors that the company cannot exploit properly itself.

The third thing is marketing, we’ve introduced some digital marketing and the effects of the digital marketing were dramatic. There was a target for the first quarter, they achieved that target new leads in the first month so we were over the moon about that and it will stand us in good stead for the longer term.

Q3: You talked about the changes, what’s the correlation between the changes that Drumz has made and the strong growth?

A3: Working the existing customer base has certainly has an impact in the short term and it will continue as we work the existing customer base because existing customers usually want more, relatively speaking, an easier sale than brand new customers, we want a lot of people into Acuity and its product string.

The second thing is the terms, they are a better balance for Acuity than it had previously and the third thing, and this is for the longer term is KPIs. We’re managing to generate statistics and information and using that information, basically real data, to take management decisions which will drive the business forward for the future.