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Gresham Tech CFO: Robust model is key in age of coronavirus

Tom Mullan, the listed financial technology firm’s finance head, reveals how a resilient business model will limit the impact of Covid-19

What attracted Tom Mullan to Gresham Technologies that he joined as CFO two years ago, was the fact that its data control products were being bought up by the largest banks and corporates, a sure sign it was doing something right.

Alongside his desire to join a UK-publicly listed firm, Mullan was drawn to its robust and sticky product offering enabling companies to get real time control over their data.

The model, with the Clareti platform at its heart, is based on the ability to detect problems across vast amounts of data. “For a simple example, if a transaction in Frankfurt, where the other side was expected in London, didn’t occur within 15 minutes, our Clareti platform would flag a break,” informs Mullan.

“We look at data through its entire life cycle. We help identify data breaks, help fix those breaks, and also help automate the process around identifying and fixing those breaks,” Mullan.

He says large financial institutions may have hundreds of data flow systems in which data can break at any point in its life cycle. “They will also have huge offshore centres, with sometimes thousands of people working on spreadsheets, that are open to human and technical error. We take out a lot of that data quality risk as large quantities of data flow through the systems,” he adds.

The technology is licensed on a subscription basis for an initial committed period of three to five-years which they expect to renew, a business cycle which shouldn’t be heavily disrupted by the coronavirus-impacted downturn in the economy. “This isn’t technology that is turned off after that term. It won’t stop overnight. We have a pretty resilient business,” says Mullan.

Given the challenges facing the global economy, which faces a major recession as a result of the lockdown imposed to slow down the spread of coronavirus, it’s worth noting the development of the Clareti platform commenced in 2010, with the first customer being won in 2011 – when the global financial crisis (GFC) was starting to impact globally.

“While it’s not directly the global financial crisis, there were regulatory drivers that were forcing companies to prove they had control over the quality of their data, which is our sweet spot.”

. The last annual accounts reveal adjusted EBITDA of £4.1m compared to £0.9m the previous year on revenue that rose from £16m to £21m over the period.

“Because Gresham Tech is a publicly listed company, there is an expectation of top line growth as well as an expectation around profitability. That is a slightly unusual combination to have for a high growth tech business of our size and has ensured that we grow responsibly, within the means of our own P&L,” says Mullan.

Life in software

Mullan’s carer was kickstarted when he joined the office of accountants EY in Southampton where he is from, aged 18, “unsure whether or not to go to university.” He says the appeal of the firm was the chance to get qualified while earning at the time.

“Being in the Southampton office helped me lot, because it enabled me to work on a variety of clients, loosely related to the tech sector, though not directly so. My business unit was focused on owner-managed businesses, that were relatively big, or the UK operations of US tech businesses.

“So I got exposure to a good variety of businesses early on, and was given a variety of opportunities such as a six month secondment in Australia, and a couple of projects in the US before transferring to the London office to work on the strategic growth market,” says Mullan.

After seven years at the frm, Mullan was hired by US tech firm Guidewire Systems, that offered a platform aimed at proper and casualty insurers, becoming its third employee in the EMEA region. “It was a bit of a punt at the time because I joined them in 2008, as the world was going through a different crisis at that time,” he says.

Mullan says the variety of the role appealed to him at the time, “getting my hands dirty on lots of different things,” he says. “I was responsible for audit, financial reporting, financial planning, HR, legal, facilities, hiring and firing staff, finding new offices around the region and even changing light bulbs! It was a huge learning curve,” he says.

In time, Guidewire’s EMEA region presence grew to around 400 staff across eight offices, delivering revenues approaching $100m a year, and Mullan eventually became director of commercial finance, “playing quarter back between the sales teams, legal, professional services and finance, and trying to be the glue to hold that together,” he says.

The chance came to become CFO of Bulgarian rival Fadata after their acquisition by a private equity firm, where the role meant setting strategy and a big career jump, taking on “things that I hadn’t been responsible for at a group level before,” he says.

“The key learnings I took were to listen to advice from others, to take that on board and try and prioritise your time and your team’s time, using it effectively. My role there was very customer facing, so I was probably with customers anywhere in the world for 25 percent plus of my time. The majority of the rest of the time was spent in Bulgaria,” he says.

But joining Gresham Tech in February 2018 provided a new dimension, as it meant running finance in a publicly owned entity for the first time. To support the group that has 150 staff across nine offices globally, Mullan says his role combines the traditional elements of a finance team, including compliance, accounting, tax, audit, with the forward-looking side of finance as well as ensuring business process and operations are in place to enable the business to scale effectively.

“The financial planning side is more heavily involved with working with the business, helping them assess investment decisions, balancing investment decisions between long term revenue growth and near term cash generation. The business level decisions we need to make are based upon the strategic objectives we set at a board level each year,” he says,

Looking ahead

Even with a robust model in place, Mullan will need to play a pivotal role in navigating Gresham Tech through the months ahead, when uncertainty is likely to prevail.

“When this all arose, we were on our UK investment roadshow week, which made for some interesting conversations. Our first priorities were ensuring we continued to support our customers and that our employees are being well looked after.

“We worked with our customers, those with implementation projects going on, where we were typically on site, to ensure our people could work remotely and have access to our customer systems. We did an initial test day that went very well, and then went to 100% home working,” he says.

Mullan says it would be wrong to say Gresham Tech won’t be impacted by the economic conditions, despite its high value, low volume software business conducted over long sales cycles. “We really don’t know if there’ll be a delay in customers and prospects making buying decisions.

“That being said, we’ve worked very hard over recent years to build our recurring revenues streams, to insert predictability into our business.

“We certainly feel as though we have the robustness to our financial plan that can withstand and be resilient to some level of delay in decision-making by our customers,” he adds.

There’s also the comfort that financial institutions, that make up a big part of Gresham Tech’s client base, are stronger than before the global financial crisis. “Speaking from a customers’ ability to pay perspective, we operate in an environment that is pretty heavily regulated, and we don’t tend to have any issues in that regard,” he says.

If anything, the prospect of greater uncertainty is likely to see a push for greater control of the data in financial institutions. Regulators are expecting banks and financial services companies to comply, saying the current global financial crisis isn’t an excuse for a lack of compliance.

“For some of our corporate customers, having great real time visibility of their cash positions, is even more critical,” he adds.

Talking to other companies on the Business in the Community advisory board he sits on, Mullan says: “I really feel for so many other businesses and individuals out there who are being far more heavily impacted than we are either to survive or to support the global response efforts to the pandemic. We’re relatively lucky in terms of our level of resilience,” he says.

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