Most people think of Amazon as an online department store, selling everything you could need and more.
But the company is also the world’s largest provider of “cloud services,” which essentially give companies access to top software and IT in exchange for a monthly or annual fee.
The cloud is big business. Amazon made $90 billion (£70 billion) in this area last year, Microsoft and Google generated a combined turnover of around $100 billion and global sales are soaring.
Glasgow-based Beeks Group is a homegrown pioneer in this sector, providing specialist cloud services to financial companies and stock exchanges.
The company is expanding at a rapid pace, there are big opportunities ahead and the shares, valued at £1.73, should respond accordingly.
Beeks was founded in 2011 by Gordon McArthur, a former IBM man with a long-standing passion for digital tinkering.
McArthur focused his business on the financial markets from the start, working with small currency traders and hedge funds and gradually moving up the food chain, supplying more products to larger clients in locations around the world.
Clear picture: Beeks has focused on the financial markets now that cloud services have become enormous
Although the services vary, the premise is the same, allowing companies to use advanced technology developed by Beeks.
There are many advantages to this. Until recently, financial companies that wanted to trade stocks, currencies, commodities or any other type of asset had to build the hardware and software themselves.
Costs can run into hundreds of millions of euros and companies must hire engineers and IT experts to ensure nothing goes wrong. Beeks removes this hassle by providing the most modern equipment and managing maintenance in exchange for a monthly fee.
Cloud services are extremely popular, from large banks to small investment managers. Renting up-to-date equipment is often a better option than owning everything outright, and Beeks has built a reputation for brain power and reliability.
The group floated on the stock market in 2017, since when revenues have increased tenfold from £3m to a projected £30m for the year to June.
The increase in revenue reflects growing demand for Beeks’ services from financial companies that are constantly looking for ways to increase the speed and efficiency of every transaction they make.
Now McArthur offers his wares at the fairs themselves. Most exchanges have their own data centers, but make extra money by selling space to customers on-site. Traditionally, companies fill this space with their own equipment. The process can be costly and cumbersome, especially when exchanges are in developing markets, with complex laws and logistics.
Beeks has developed technology that allows exchanges to offer fully equipped sections in their data centers – and the initial response has been enthusiastic. The Johannesburg Stock Exchange became a customer last fall and has already extended its contract.
Further growth is expected. Banks and large institutions that want to trade South African shares can best do so if they have space in the exchange’s local data centre. But many are put off by the hassle and expense of installing and managing their own equipment. Thanks to Beeks technology, Johannesburg can deliver all the equipment and kaboodle in a way that makes everyone happy.
McArthur gets a lucrative long-term customer, the exchange gets juicy fees from companies renting the space and they can easily trade in the South African market.
More deals are in the pipeline. McArthur talks to 18 of the 20 largest global stock exchanges. Deals can start small, but if we look at Johannesburg, they can quickly expand, especially since no other company offers the same service as Beeks.
Unlike many small technology companies, Beeks is profitable, with low loans and a healthy bank balance. Analysts expect pre-tax profits to rise by 80 percent to £4.1 million this year, rising to £6 million by 2025. Sales are expected to grow from £30 million in 2024 to at least £40 million next year . pay dividends. Founder McArthur owns 37 percent of the shares and employees own a lot more, so they are highly motivated to succeed.
Midas judgment: Technology companies are often associated with Silicon Valley, but Britain is also leading the way and Beeks is an example of this breed. At £1.73p the shares are a buy.
Traded on: Goal ticker: BKS Contact: beeksgroup.com or 01505 800779
