Yesterday, we pressed the button and bought RPM Global (RUL) having initially added the position onto our Emerging Companies Hitlist in September when it was trading around $2.70, with the stock up over 10% since. As a refresher, RPM is a nearly $700m company that develops and sells enterprise mining software solutions, covering all aspects from mine planning to execution. They used to sell this software under licence for a large upfront fee and then smaller maintenance fees each year. They flipped the model in 2017, turning it into an annual subscription-based service, which caused short-term pain on revenues, but the change is now bearing fruit with revenues reoccurring in nature, making them stickier and a lot more predictable over time while compounding does the rest.
- The change took time to yield results, but it’s now yielding tangible benefits to the company’s financial metrics. In FY25, we expect total revenue of around $120m with earnings (EBITDA) nearing $20m, up 20% y/y. In FY26, that growth rate is expected to leap again to ~30%, highlighting the model’s power as it scales.
We are bullish on the broader mining space over the coming years, with the energy transition driving huge investment at a time when running mine operations as efficiently and sustainably as possible becomes increasingly important – RUL’s suite of solutions helps mining companies do this.
