itim Group – Tiddler Turning Into Whopper With Recent Big Contract Wins, Making Shares Start To Appeal

This little software solutions business, which is capitalised at just under £12m, is now beginning to turn around from losing money over the last three years.

Recent new business wins and existing contract renewals will help to drive its ARR to well over 75%.

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I like that, especially if ongoing operating costs can be contained tightly enough to see good bottom line results in due course.

The Business

The itim Group (LON:ITIM) was established in 1993 by its founder, and current CEO, Ali Athar.

Initially it was a consulting business, helping retailers’ effect operational improvement, before six years later expanding into the provision of proprietary software solutions.

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By 2004 it was focused exclusively on digital technology.

Over the years the company has grown both organically and through a series of acquisitions of small, legacy retail software systems and associated applications which itim has redeveloped to create a fully integrated end to end Omni-channel platform.

Today is principally operating as a Software-as-a-Service (SaaS) based technology company.

It enables the store-based retailers to optimise their businesses to improve financial performance.

Its solutions include Unify Sales, Unify Stock, Unify Pricing & Promotions, Unify Supply and its Profimetrics AI Suite, which is a multi-level management, simulation and optimization engine. T.

It has developed an omnichannel platform that enables retailers to adopt an engaging customer-centric approach to shopping in-store, online and on mobile.

Its retail software solutions support multi-channel sales and service, enterprise order management, price and stock optimisation, and supplier management.

Recent Big-Name Wins

In late February it won a five year multi-million-pound contract for its Omni channel retail platform with QUIZ clothing, a fashion retailer specialising in occasion wear and dressy casual wear with 73 stores and 274 concessions in the UK.

Two months later it announced an additional services contract for its Unify platform with toy retailer The Entertainer which is opening in over 800 Tesco stores across the UK and Ireland.

In the middle of May it announced a five year multi-million-pound contract renewal with Majestic Wine, the UKs largest specialist retailer with over 200 stores.

Earlier this month it announced that it had signed a five-year multi-million-pound contract with Assaí Atacadista, the largest Brazilian wholesaler, with more than 300 stores.

The Equity

There are some 31.2m shares in issue.

Larger holders include the Athar family (38.40%), Lewis family (18.07%), Robert Frosell, Dir (7.64%), Herald Investment Management (6.37%), Curtis family (4.12%), Ian Hayes, Dir (2.72%), Michael Jackson, Chmn (1.76%), Sandra da Costa Ribeiro, Dir (0.87%) and Justin King (0.742%).

Analyst View

Charlie Cullen and John Cummins at WH Ireland consider that this group’s shares are trading on an undemanding rating compared to their ‘fair value’ of 55p a share.

For the current year to end December they have estimated revenues of £17.0m (£16.1m), with its pre-tax loss easing to just £1.0m (£1.1m), leaving the company with £0.5m cash at bank.

For next year the analysts see a turn into profits of £0.4m on the back of £19.0m in revenues, generating earnings of 1.8p per share and with a doubling of cash at bank of £1.0m.

My View

This group’s shares are already allowing for a substantial improvement in profitability, sufficient to justify an even higher market price.

Its growth in revenues is steady and that should result in greater bottom-line results.

Just two years ago the company’s shares were trading at 125p, since when they have been as low as 20p in December last year.

They touched 46p in early March ahead of announcing its 2023 results.

The shares have held steady since the mid-May AGM Statement, and appeal at around the 37p level.

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