The RPMGlobal Holdings Ltd (ASX: RUL) share price has traded modestly this week despite the company gathering momentum heading into reporting season. On Monday RPMGlobal (RUL) announced another milestone for subscription revenue and RUL shares ended the day marginally higher, up 2.75%.
See why RPMGlobal (ASX: RUL) shares are on my watchlist
As I noted in the podcast episode above, featured on The Australian Investors Podcast (don’t forget to subscribe 😉), RPMGlobal’s shift to subscription revenue is a tough but good call for the company to make.
RPMGlobal software: cashing in on the commodity boom
Despite only updating the market a fortnight ago, RPMGlobal made an announcement Monday to confirm it had achieved sales of software licences to the tune of $50.3 million for the financial year, pushing the total amount of future software subscription revenue to $90 million.
Importantly for us, this now places RPMGlobal on an annualised recurring revenue figure of $31.6 million from subscription revenue alone. For context, the company began the 2022 financial year with $21.9 million. Meaning it has layered on nearly 50% more ongoing revenue this year — at very high margin.
Last year, RPMGlobal sold a record $47.7 million of subscription revenue. This year (so far) it’s sold $50.3 million. So it’s keeping pace with the post-Covid boom.
For me this is important because, as shown below (top left), a big second half was needed to keep business momentum flowing on from the first half, when it reported $24.2 million of sales.
Given the commodities cycle we’ve experienced over the past year, I think this is a solid effort from RPM and, unlike the price rout of 2013-2015, should help the company through the inevitable leaner years that come. While the company’s impressive CEO, Richard Mathews, only took the helm in 2012/2013, RPMGlobal has a track record of making the most of downturns in the resources sector.
For me, while risks persist in the form of a downturn in mining budgets, RPMGlobal shares are worth a spot on long-term investors’ watchlist.
The article first appeared inside Rask Invest, our members-only service.
