By Kristy Dorsey

Shares in Beeks closed more than 10 per cent higher yesterday after the Scottish fintech highlighted three significant contract wins in what is normally the quietest period of its financial year.

The strong stock price response was despite confirmation that Beeks plans to suspend dividend payments, with the cash instead being re-invested in the business to support further growth. This follows a 24 per cent increase in revenues during the year to June 30.

Chief executive Gordon McArthur said the prospects for Beeks, which joined London’s Alternative Investment Market (AIM) in November 2017, “have never been more promising” after its new Proximity Cloud product quickly secured its first client in a contract worth more than $1 million (£730,000).

Beeks provides systems to speed up online trading in financial products, with Proximity Cloud pulling together different elements to create a “one-stop shop” for banks and other trading organisations. Its first client, which took part in beta testing Proximity Cloud, signed just four weeks after its official launch.

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“We hope some of the others on that beta programme will soon convert as well,” Mr McArthur said. “We believe over the next 12 to 24 months this will really transform the shape of the business.”

The other major contract wins after the close of the financial year included a $1.1m deal for an analytics product procured by Beeks through last year’s Velocimetrics acquisition, plus the firm’s largest-ever multi-year infrastructure contract valued at $2.7m (£2m).

Monthly recurring revenue now stands at £15m, up from £13.8m in June. Beeks said it therefore expects revenues for the current year to be ahead of previous market expectations.

“To achieve a record quarter in what is typically our quietest period is testament to the strength and value of our enlarged offering,” Mr McArthur said. “With Proximity Cloud showing considerable early promise, validating the prospects we envisioned, I have every confidence that our new product will spur continued growth.”

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In what analysts at Canaccord Genuity described as a “very creditable performance”, Beeks posted a 13% increase in pre-tax profits to £1.6m during the 12 months to the end of June, with revenues up 24% at £11.6m.

Currently headquartered at Hillington, Beeks is preparing for a move in the first quarter of next year to a new head office near Braehead with space for up to 200 people. Mr McArthur said it would take “a while” before that reaches capacity, though global headcount is continuously increasing and expected to reach about 100 people by the end of this year.

Since the end of June staff numbers have increased from 65 to 80, driven primarily by growth in revenue-generating areas such as sales, marketing and product development. About 60 of these employees are based in Scotland. However, the company has no Scottish-based institutions among its clients.

Its international network of 18 datacentres in financial markets around the world serve approximately 250 institutional clients. About a dozen of these customers are among the largest “Tier 1” organisations in the sector, with Beeks “confident” of securing additional Tier 1 customers in the year ahead.

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During a £5.5m fundraising completed earlier this year, Beeks consulted with shareholders about changing its dividend policy, which last year resulted in a total pay-out of 0.35p per share.

Explaining the company’s reasoning, chairman Mark Cubitt said in a statement: “Notwithstanding our solid balance sheet, the expected growth and investment into the business over the next few years driven by Proximity Cloud has led us to take the decision that cash would be better re-invested in the business to compound growth for the benefit of shareholders in the medium-term.

“Therefore subject to shareholder approval at the forthcoming annual general meeting, future dividend distributions are expected to be put on hold.”

With a background in software and IT solutions, Mr McArthur founded Beeks as a three-man operation in 2010 to fill a gap in the market for low latency trading infrastructure. He currently retains a 46.9% holding in the business, equal to more than 26 million ordinary shares.

The stock closed yesterday’s trading18.5p higher at 189p, an increase of more than 10.8%.