RPMGlobal CEO Richard Mathews says the mining software company is positioned for further sales and earnings growth with its under-appreciated software licence backlog and now built “field of dreams” product line-up.
Speaking after the Australian Securities Exchange-listed RPMGlobal reported 15% year-on-year growth in revenues to A$113.3 million for FY2024, and 28% higher EBITDA of $15.3m, Mathews said the company’s $161m of “pre-contracted, non-cancellable software revenue … is the really big important metric for us”.
“We noticed that there’s certainly some keyboard warriors out there looking at the company’s market cap as a percentage of profit, and I think they’re missing the whole point,” Mathews said.
“If you look at what we recorded in terms of software subscription revenue last year, $45.6 million, that $161m represents about three-and-a-half years of software licences. We’ve sold them; they are non-cancellable. Customers will pay for those.
“But for whatever reason, no one seems to want to give us credit for it.
“I know I bang on about it, but that’s real money.”
RPMGlobal doesn’t provide guidance on where and when its backlog is due to land in its year-to-year sales ledger. Its total FY24 software revenue was up 13% yoy at $72.5m.
Consulting business revenue was also 18% higher yoy at $31.1m.
RPMGlobal’s share price is down about 9.5% in the past month, giving it a market value of circa-$525 million. Year-to-date it has climbed 35% as the company continues to direct free cash towards buying its own shares.
It spent $12.7m on share buybacks last year and has already completed $6.7m of purchases this year. “We’re pretty clear on what our strategy is,” Mathews said. “We think we are doing it well in terms of consistent profitable growth, and we’re pushing our EPS [earnings per share] up as quickly as we can.”
RPMGlobal is seen as a target for bigger global software and tech firms following AspenTech’s failed bid for Australia’s Micromine, Sandvik’s mega-Deswik deal and other M&A in the space such as Bentley’s US$1 billion-plus acquisition of Seequent.
“We are the only public-listed [mining] technology company that’s come from that 2010-2012 [period] … All the desktop guys got bought up by the OEMs or other parties,” Mathews said.
“We feel like we’re the solution provider of choice for the surface miners. We’re happy to compete against anyone in the surface space [and] certainly against [customer] internal systems as well. We’ve had a weakness in the underground space … but certainly AMT has been making some inroads into that market for a period of time, and ShiftManager is starting to do that as well.
“So we’re feeling a lot better about how we’re moving into the underground space.”
Mathews said RPMGlobal wrapped up its 12-year “core software expansion project” in the second half of FY24, aimed at building a portfolio of technical mining products with the “core functional breadth, depth and scalability needed to run complex multi-site mining operations”.
He said with recent acceptance of RPMGlobal’s newest software products by “the largest miners in the world, we are now confident our products are tier-one ready”.
The “build it and they will come” plan had resulted in FY24 global framework agreement (GFA) signings with three global mining majors, including two US-based gold heavyweights, accounting for $40.6m of the year’s software licences sold.
“I spoke about a field of dreams type of thing … We are very, very comfortable competing with our current suite of products,” Mathews said.
“We don’t have any brand new products on the drawing board at all.
“We don’t have anyone that we’re looking at acquiring.
“They [GFAs] take ages to put in place but once you’ve got them there’s some real benefits for the customer’s procurement team and benefits for us.
“They really want to expand our footprint inside their accounts.
“We’re going to be working with customers to add different modules to the solutions.
“We expect more of our development costs to be R&D funded.
“We’re not trying to turn the whole development team into a revenue line but customers have made it quite clear to us that it’s better to pay for functionality that we can work with them to build to replace these other [internal legacy] systems and other costs they have in their business.”