‘As higher gross margins and operational gearing come through, we would anticipate a rapid growth in profits,’ Allenby said in a 14-page research note.

Newmark‘s Safetell operation specialises in physical assets such as security doors, screens, safes, and cash-handling devices, while its Grosvenor Technology arm focuses on human capital management (HCM) and access control.

Put simply, Grosvenor’s products and systems help companies and organisations provide secure and safe work environments. As we’ll see later HCM is the key driver of Newmark’s growth programme, and its ‘five pillars’ strategy.

Newmark's Safetell operation specialises in physical assets such as security doors, screens, safes, and cash-handling devices, while its Grosvenor Technology arm focuses on human capital management (HCM) and access control

Newmark’s Safetell operation specialises in physical assets such as security doors, screens, safes, and cash-handling devices, while its Grosvenor Technology arm focuses on human capital management (HCM) and access control

Digging into the recent results announcement, two messages emerge. The first is that Newmark has managed the loss of a significant client – HR applications group Ultimate Kronos Group (UKG) – while barely skipping a beat.

And, at the same time, the figures reveal Newmark’s strategy is gaining traction with a business once synonymous with security hardware now generating a significant base of revenue from the software and services it provides.

On the UKG contract loss, CEO Marie-Claire Dwek is sanguine: ‘A lot of our investors were worried about the loss of UKG, which was one of our first tier-one US clients.

‘While UKG bought a lot of products from us, it was at a low margin and they took no services. New clients we are taking on are at healthier margins and take services from us as well.’

Going forward, the plan is to increase the recurring revenue base (which was up 77% year-over-year in the first half at £2.3 million) by onboarding new customers, but also gaining a greater share of wallet from existing users of its products.

As mentioned above, Newmark’s Grosvenor operation will be key in this regard, and its strategy (those ‘pillars’ also mentioned above) can be distilled down to just five words: continue, attach, push, displace, and diversify.

So, it will ‘continue’ to seek and onboard new HCM partners; it will also ‘attach’ services to all new business and ‘push’ services to existing customers.

At the same time, the aim is to ‘displace’ others to get a fuller share of wallet, and ‘diversify’ by being the go-to provider of HCM products and services to large HR and business systems providers.

Grosvenor has broadened its offerings with GT Connect, GT Protect, and the GT4-Lite device, aiming to enhance customer engagement and adoption products offered.

GT Connect is a secure, cloud-based platform facilitating real-time connectivity, remote diagnostics, and comprehensive data management by integrating various devices into a single network.

GT Protect offers a robust hardware warranty service, ensuring quick response times, next-day device replacement, and priority technical support. This complements Grosvenor’s strategy of progressive device estate updates, in line with third-party HCM software subscription models, introducing a per-employee-per-month revenue framework.

The GT4-Lite terminal, notable for its competitive pricing and flexibility, caters to a broad market spectrum, enabling Grosvenor to challenge lower-cost rivals while supporting software upgrades remotely.

As part of its expanded offer, it also provides customers with lifetime warranty hardware, secure cloud access, and round-the-clock technical support through GT Services.

This shift of the business model to cloud-based and hardware-enabled software and services revenue ‘substantially increases Grosvenor’s addressable market and the scope for recurring revenue’, the broker Allenby said.

All of this forgets Safetell, which Allenby says has been ‘reinvigorated’ by new management after several years of revenue contraction.

This has involved a refresh of the product lines, while the focus has shifted to the auto door maintenance management sector, which is substantially larger than Newmark’s historic markets.

This has resulted in a return to growth in the last financial year with Safetell entering 2024 with an expanding pipeline of prospects, Allenby noted.

With its strategy clearly starting to gain commercial traction, what can we expect in 2024 and beyond?

‘We’re halfway through the second half of our financial year and it’s been a good period so far with healthy pipelines in all areas of the business: HCM, access control, and in Safetell,’ says CEO Dwek.

Newmark has taken on three tier-one clients, primarily in the US, which will help underpin growth in the second half of the financial year.

Longer-term, that focus on growing the recurring revenue base, and aggressively targeting a greater share of wallet, positions Newmark as a recovery play. Revenues are on the up and profit margins are expanding, ‘especially with software services, which gives us ‘stickier’ clients’, says CEO Dwek.

‘We’ve also got a great reputation,’ she adds. ‘We are a niche company, but we’re one of the key players and we’re growing year on year. We had a couple of difficult years after Covid, returned to profits last year, looking to be very profitable [from here on in].’

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