A couple of weeks ago, I spent the day with a team at Brady headed by Ms. Libby Koehn, Chief Product Officer. It had been a while since we had had a full briefing from the company as through much of 2017, Brady was focused on internal re-organization. According to the financial highlights page of the company’s website, the 2017 financial year saw quite a lot of internal and external activity;
- During the year we have streamlined the Group’s structure into three distinct areas: Value Enablement, Business Enablement and Product Teams;
- Focused the business to concentrate on our core Commodities and Energy products;
- Sold the recycling business to AMCS for $6.5 million, allowing us to strengthen our balance sheet subsequent to the year end;
- Put in place the overarching product design that will enable us to deliver new and innovative products;
- Delivered new product functionality for our Concentrates solution, created a consolidated Energy platform for the Integrated Single Electricity Market and developed new functionality to support market changes for Elhub in the Nordic market and LME Smart for the London Metals Exchange;
- Continued our transition to a recurring revenue model with recurring revenues rising to 66% from 62%; and
- Secured seven new customers in our core E/CTRM markets.
In recent months, Ms. Koehn has been explaining Brady’s approach and strategy to us including a recent written interview and a video interview shot while I was there. As she told us in the written interview, “……a lot of work over the last 12 months has been on technology infrastructure to enable our next-generation solution which has extended and deepened our service-based architecture in a number of areas. This also allows us to standardise our APIs for integration and provide a greater degree of personalization for users through our new, browser-based user experience.
Functionally, we are continuing to focus on Brady’s strengths, in markets where there are no vendors who provide complete enough solutions – namely concentrates and US cotton trading. Our concentrates solution has integrated the strong functionality we have in our Aquarius product into our go-forward physical trading platform. We believe this extends our position as the leading vendor for integrated concentrates and refined metal trading, with the most complete solution in the market. Our US cotton solution has also had a lot of investment, and we believe provides the richest solution available for this market.
On the energy side, we have focused on market connectivity mainly for front-office tasks. This provides our customers with solutions that work consistently across the networks and markets they are expanding into. In addition, we are restructuring and extending our coverage of short term markets and processes and will scale Brady’s market adapter model to apply to a wider range of Front, Middle and Back Office processes.
Across all solutions we are also strengthening the integration of physical and derivative trading and the ease of integration with our clients’ systems to all Brady products – which is essential to provide successful and robust solutions for large clients. This allows clients to integrate multiple systems with ours in a consistent way and ensures streamlined and reliable inter-operation.”
The video interview is posted in the media section.
It will be interesting to see how Brady does over the next several months, but there was an air of enthusiasm and focused activity there during my visit. I spoke with people from product development to sales and marketing while there and learned much more about product strategy, which will involve much more focus on the Fintrade product for commodity trading and commodity management. Sale of the Recycling business also appears to have freed the company to focus again on what has historically been its core activities. However, it remains a somewhat difficult market for many vendors with a good deal of uncertainty as a result of considerable change in the industry both from a business and technology perspective. Brady continues to shift its focus to recurring revenue as well, which essentially defers revenues that would have been recognized in a traditional perpetual license model to the future, but also increases revenue certainty and a steady cash flow to support operations. According to financial statements, the company appears to have spent around 2m GBP on its re-organization and initiatives to modernize and change yet it still has a good level of cash on hand. More acquisitions by the company are to be expected, according to Ms. Koehn commenting on recent M&A activity in our latest CTRMRadio edition. We will continue to watch Brady’s progress in the coming months.