| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 153.09 | 308 |
| Intrinsic value (DCF) | 10.91 | -71 |
| Graham-Dodd Method | n/a | |
| Graham Formula | n/a |
KRM22 Plc is a London-based financial technology company specializing in risk management software for the global financial services industry. Founded in 2017, the company provides a suite of regulatory compliance and risk analytics solutions, including real-time enterprise risk monitoring (Risk Cockpit), market surveillance tools, and digital client onboarding platforms. KRM22 serves capital markets firms, brokers, and financial institutions across the UK, Europe, and the US, helping them navigate complex regulatory environments like SM&CR, MiFID II, and market abuse surveillance. The company's SaaS-based offerings address critical pain points in pre-trade risk, post-trade stress testing, and multi-jurisdictional regulatory reporting. Operating in the £50+ billion regulatory technology (RegTech) market, KRM22 competes at the intersection of financial services and enterprise software, with particular strength in derivatives trading environments where real-time risk visualization is paramount.
KRM22 presents a high-risk, high-reward proposition in the growing RegTech sector. The company's negative earnings (-£4.6M net income) and operating cash flow (-£879k) reflect its growth-stage status, though its £11.8M market capitalization suggests investors are pricing in future scalability. The niche focus on capital markets risk management provides differentiation, but reliance on financial sector IT budgets makes revenue cyclical. Key risks include customer concentration (likely <100 enterprise clients given £5.3M revenue) and competition from better-funded rivals. The negative beta (-0.198) indicates counter-cyclical behavior versus broader markets, potentially appealing as a hedge. Success hinges on converting regulatory tailwinds (e.g., MiCA, DORA) into recurring SaaS revenue while improving gross margins from current ~60% levels typical for risk analytics software.
KRM22 occupies a specialized niche between enterprise risk management (ERM) vendors and capital markets trading systems. Its competitive edge stems from: 1) Real-time risk visualization capabilities tailored for derivatives trading desks, 2) Pre-configured regulatory workflows for UK/EU compliance (SM&CR, MAR), and 3) API-first architecture allowing integration with OMS/EMS platforms. However, the company lacks the global scale of Bloomberg's risk solutions or the AI-driven surveillance of Nasdaq's Smarts. Its £5M revenue suggests sub-1% market share in the $8B capital markets risk tech segment. Differentiation comes from combining trade surveillance, VaR analytics, and regulatory reporting in a single pane - a 'risk cockpit' approach that reduces silos for mid-tier brokers. The main challenge is competing against vertically integrated offerings from trading platforms (e.g., FIS, Broadridge) while maintaining sufficient R&D spend (currently ~20% of revenue) to keep pace with machine learning advancements in risk modeling. Partnerships with cloud providers (AWS/Azure) could provide distribution leverage against larger competitors.