Technology stock

A tech stock for the new “normal”

  • H1 recurring revenue up 31% to £3.1m to account for 39% of total revenue of £7.9m.
  • The operating loss of £1.7 million reflects greater investment in sales, marketing and product development.
  • Net cash of £8.5 million.

The accelerated pace of digital transformation brought on by the pandemic not only validates Checkiit is (CKT:52p) value proposition in the new “normal”, but is accelerating the technology group’s transition to a software-as-a-service (SaaS) business across its five verticals: healthcare, food and retail, facility management, pharmaceutical and fast food.

That’s because a growing number of businesses need to manage their officeless workforces through data-driven remote monitoring and automated system monitoring. Checkit’s workflow management software meets these demands by digitizing operational workflow planning and reporting to automate manual processes, increase efficiency and provide better management insight. .

New features built into Checkit’s monitoring technology platform include event-driven tasks that allow users to feed sensor (equipment or building) alerts directly into a corrective workflow for the frontline staff via their mobile device. This ensures a quick response to preserve stored inventory, repair equipment and maintain security, as well as creating a corrective action audit report.

Checkit’s new job sharing tool is ideal for collaborative work. A specific set of activities, ranging from lab opening procedures to cleaning and food safety checks, is assigned to one person and can then be taken over by colleagues. This is particularly useful if a task is not completed before a shift transfer or if remote teams want to distribute ad hoc tasks among themselves to speed up work.

Recurring revenue is rising sharply, underscoring the underlying demand for Checkit’s technology, so much so that annual recurring revenue of £6.6m at the end of July is nearly 44% of estimates from income for the full year. Additionally, the growing proportion of subscription revenue in the sales mix is ​​driving gross margin (up from 35.9% to 44.3%).

Admittedly, the cost of increased investment in sales, marketing and new products resulted in a slightly higher operating loss of £1.7m in the first half of the year, but it’s worth it given that the new business pipeline is four times higher than at the beginning of the year. Importantly, net cash of £8.5m is helping to support Checkit’s growth to cash profitability, while the acquisition of US company Tutela Monitoring Systems is expected to be a major driver of income in North America.

Checkit’s £24m business valuation equates to 1.6x annual revenue estimates, an unwarranted 70% discount to the UK software’s peer ratings, and I’m sticking to my target price of 75p (‘Operationally Fit for Outperformance”, April 30, 2021). To buy.

■ Simon Thompson’s latest book Successful Stock Picking Strategies and his previous book Selection of stocks for profit can be purchased online at, or by calling YPDBooks on 01904 431 213 to place an order. The books are not sold by any other source and are priced at £16.95 each plus £3.25 postage and packaging [UK].

Promotion: Subject to stock availability, both books can be purchased for the promotional price of £25 with free postage and packaging.

They include case studies of companies in Simon Thompson’s low-cost equity portfolio, outlining the investment characteristics that made them successful investments. Simon also highlights many other investment approaches and stock screeners he uses to identify small cap companies with investment potential. Content details can be viewed at