One firm is clearly cashing in on new GDPR rules. These are the EU-wide ‘General Data Protection Regulations’ due to come into force on 25 May.
Recently IPO’d cyber security training and consultancy services provider GRC International (GRC:AIM) put out a year end trading update on Wednesday showing an impressive 122% jump in billings. That was all organic too. You can read more about GRC here.
Total billings for the 12 months to 31 March 2018 ‘exceeded’ £16.2m, a rapid acceleration on the 41% equivalent growth in the previous year. Revenue is anticipated to show a similar leap, to around £15m.
Revenue is income booked for the next 12 months, billings includes those sales plus contracted income beyond the next year.
FAST OUT OF THE AIM FLOAT BLOCKS
This is a great start to public markets life for GRC and its shareholders, and it shows in the share price. The stock is up more than 6% on Wednesday at 167.5p. Putting that into context, the company joined the junior AIM market on 5 March at 70p per share.
A couple of points are worth considering though. First, there is little indication of profit just yet and drawing conclusions at this stage is made more difficult given the company’s spend-to-grow ambitions.
Previous earnings before interest, tax, depreciation and amortisation (EBITDA) margins ran at about 16%, which implies somewhere in the ballpark of £2.5m EBITDA for the year just closed.
This figure, of course, strips out depreciation and amortisation charges and often software development spending, of which we would expect a fair bit from GRC.
The other thing to consider is timing. There has been plenty of panic at organisations as the GDPR deadline looms. This may have led to a deluge of work coming GRC’s way in the race to get GDPR-ready.
Perhaps the true test for GRC will come in 2019 when many experts believe the majority of initial GDPR compliance activity will be complete and related consultancy and advisory revenue could start to shrink.
