RPMGlobal Holdings  Ltd - (RUL) - market update 2024.07.02

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RPMGlobal Holdings Limited is an Australia-based company specializing in software licensing, consulting, implementation, and support, as well as technical, advisory, and training services. The company offers consulting and advisory services and technology solutions to the global mining industry through its Software and Advisory Divisions.
The Software Division delivers all software offerings, including support (maintenance), training, and implementation services to mining companies. Focusing on advanced mining technology and deep domain expertise across the mining lifecycle, RPMGlobal guides global miners towards more efficient and sustainable operations. 

RPMGlobal’s software solutions cover the entire mine lifecycle, including scheduling, asset management, finance, and operations.
RPMGlobal leads the market in enterprise solutions from mine planning to execution, offering the industry's most advanced scheduling tools along with top-tier simulation, costing, and execution solutions in both production and maintenance, all built on the industry's only Enterprise Planning Framework (EPF).

The Advisory Division provides consulting and advisory services, including technical and economic analysis and assessment of mining activities and resources. RPMGlobal’s consulting and advisory expertise covers all key mining regions, methods, and commodities worldwide. They partner with mining clients, investment firms, OEMs, battery cell manufacturers, and offtakers to provide bespoke, independent insights and advice based on a strong understanding of the mining industry’s needs and challenges, including environmental, social, and governance (ESG) factors.

The company continues to expand its ESG service lines with a focus on assisting mining clients with their decarbonisation and mine closure plans. Large mining studies in Europe, the Middle East and Asia provided a strong foundation for their mining and geology teams to open opportunities to cross sell the company’s software products and advisory services into new markets.

RPMGlobal has been a business that relies heavily on the fortunes of the mining industry, and it is impacted by the fluctuation of commodity prices which underlie its clients' core product base. Its software sales have slowly moved away from the legacy business of selling license services to a subscription-based model for their software services. This transition has resulted in periods where upfront revenue has shifted to ongoing subscription-based revenue, impacting the bottom line.
The company has also improved its business disclosures, making the annual reports cleaner and easier to follow. RPMGlobal turned a profit last financial year, with positively forecasted revenue and profit for FY24 as well. The company bought back $7.6 million of its own shares between 1 July 2022 and 30 June 2023. As of 30 June, the group had cash reserves of $34.8 million and no bank debt. RPMGlobal falls within a market cap where all the software and services it provides can add value and offer cost savings for a company considering a takeover.

With the recent update released yesterday, RPMGlobal's subscription licenses increased, which is the preferred strategy of the company’s sales teams as it delivers stable and predictable recurring revenue reported over multiple financial years. However, this has led to a significant drop in perpetual license revenue, decreasing by over 1.6 million year on year. Consequently, this has resulted in lower than forecasted profitability. It is also worth noting that the value of subscription license revenue reported within the financial year is directly related to the timing of when the contract is signed. The majority of software subscription licenses sold during the second half of FY2024 were concluded in the last month of the year. This timing profile has shifted $1 million of expected subscription revenue from being recognized in FY2024 to future reporting years. RPMGlobal stock fell as much as 21.7% to A$2.17, on the open at the back of the update.

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RPMGlobal Holdings Ltd - (RUL) - market update 2024.07.02