The Tide is rising

Crimson Tide (AIM: TIDE) is a tiny tech company with only £1.4 million sales just reported for the 2015 year. However it’s highly unusual for its size in that it’s profitable and generates cash. Sales are forecast to grow to £2.4 million next year and if this momentum can be built on, the shares could get interesting.

 The Tide is rising


Crimson Tide (AIM: TIDE) is a tiny tech company with only £1.4 million sales just reported for the 2015 year. However it’s highly unusual for its size in that it’s profitable and generates cash. Sales are forecast to grow to £2.4 million next year and if this momentum can be built on, the shares could get interesting.

Crimson Tide (AIM: TIDE) is a tiny tech company with only £1.4 million sales just reported for the 2015 year. However it’s highly unusual for its size in that it’s profitable and generates cash. Sales are forecast to grow to £2.4 million next year and if this momentum can be built on, the shares could get interesting.

 

The company operates in a growing market – mobile applications. It was founded 20 years ago by Chairman Barrie Whipp and has focused on mobile solutions over the last decade. The software is designed to allow business users to schedule and record regular tasks carried out by employees. It’s popular in facilities management to keep track of cleaning and housekeeping tasks. In healthcare and logistics it records deliveries and patient visits. The customer typically uses a rugged mobile device, which can be rented as part of the package. Payment is by monthly subscription on a long term contract.

 

For a tiny company with few resources invested in marketing, Crimson Tide has accumulated some impressive customers. Tesco signed a significant three year deal towards the end of last year and there are opportunities to sell to other supermarkets. Nestle uses it to log deliveries, it helps distribute the Metro newspaper in London, and Interserve use it in facilities management. A recently appointed sales director is developing relationships with partners to sell the service and there should be good operational gearing as the top line grows.

 

Crimson Tide has been cautious since listing on AIM in 2006. This means value hasn’t been destroyed by raising lots of money to support a too-large cost base. But it also means the company has remained small. But with sales now forecast to double over the three years to 2017 and good visibility from recurring revenues, Crimson Tide could be one to watch. The stock trades on 15.5 times WH Ireland’s earnings forecast for 2017.

 

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