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112. Bull, Bear & Beyond – Concurrent Technologies: executive interview
5 Plays5 months ago
In this interview, we speak with Concurrent’s CEO Miles Adcock and CFO Kim Garrod. Miles provides an overview of the business and explains the steps he has taken since joining the company in 2021. He discusses the performance of the Products business and the rationale for entering the Systems business, as well as the company’s approach to technology innovation. He closes with his view on potential M&A. Kim discusses the impact of expanding defence budgets and the company’s plans to expand manufacturing capacity. She walks through the cycle from design win to revenue, highlighting that FY26 revenue and profitability are likely to benefit from recent design wins.
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About ‘Bull, Bear & Beyond’
Bull, Bear & Beyond': features candid conversations with senior executives and from our own team of experts from across industries, exploring strategy, innovation, and the opportunities shaping their markets and 60-second pieces are a compressed summary of content designed to convey our message in a single, easily shareable hit.
About Edison:
Edison is a content-led IR business. We believe quality investment content should inform all investors, not just brokers. Our mission: engage and build bigger, better-informed investor audiences for our clients.
Edison covers 50+ investment trusts, read about them here: https://www.edisongroup.com/equities/investment-companies/
Original interview published on 30/07/2025 and reposted as a podcast
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Transcript
Introduction of Guests
00:00:07
Speaker
Welcome Edison TV. I'm Catherine Thompson, technology analyst at Edison, and I'm here today with Myles Adcock, CEO, and Kim Garrard, CFO of Concurrent Technologies.
Company Overview: Concurrent Technologies
00:00:19
Speaker
Concurrent is an aim-listed designer and manufacturer of high-performance embedded computing solutions for use in critical applications across various industries.
00:00:30
Speaker
Welcome, Myles. Good morning.
Strategic Changes Since 2021
00:00:33
Speaker
and Just to kick off, do you think you could give us a brief intro to the business? Yes. We're 40 years young this year, um and we've spent 40 years taking Intel processors and designing the rest of the printed circuit board that turns that Intel processor into a highly cabal computer.
00:00:52
Speaker
Our computers are fairly small, postcard-sized typically, but they deliver some of the most powerful computing solutions in the world, typically to defence, but not always defence.
00:01:03
Speaker
And you joined the business in June 2021 and instigated a strategic review then. um Since then, before financial performance has significantly improved and kind of more so
Opportunities in Market Changes
00:01:14
Speaker
recently. Could you talk us through the steps that you took and kind of what you've seen change in the market over that time?
00:01:21
Speaker
Yeah, the business was run very much as a small business run really from inside the head of its leader who had successfully run the business for 36 years. What I found when I joined is that our products were very late to market to the point that we really had little market left to serve.
00:01:40
Speaker
Indeed, in 2021, 80% of our order intake was for last time buy orders from customers. So that's a business running out of road quite rapidly. So that prompted me to fundamentally redesign how that business works with the absolute focus on how do we get product to market as early as possible.
00:02:00
Speaker
So I'm pleased to say 2022, one year later, 80% of our order intake was now for new and current products. And we've been very good since then ah being very early to market with our products, which is a game changer for this business.
00:02:15
Speaker
If you're first to market with the latest technology, you have no other competitors. And if we get designed into a customer solution, we can be in that program with that customer for maybe 10 years.
00:02:27
Speaker
So if you early to market, get designed in, you can enjoy up to 10 years revenue from a customer.
Technology Roadmap and Kratos Solution
00:02:32
Speaker
We're doing very well at securing that sort of work. That's where our growth is really coming from. 80% of people in this business started after I did.
00:02:43
Speaker
So as a metric for transformation, that's quite potent. um And looking specifically your recent performance, um in your products business, you had significant success in FY24. So, you know, in terms of design win activity, order intake and profitability. Can you talk us about what's helped you to achieve this and also your competitive environment?
00:03:04
Speaker
Yeah, i a really important thing in the market that has happened for us is about five years ago, the DOD in America, and the rest of the world follows America in the end on technology, the DOD said, we have had enough of being locked into suppliers because they use their own proprietary architectures, like think like a connector. I think if you're in the Apple ecosystem, it's actually quite difficult to leave.
00:03:31
Speaker
And they said, we will agree open standards so that we have a level playing field so that anyone can compete for work. That's a huge opportunity to us. Our competitors are largely ah very big American corporates, maybe a billion or $3 billion dollars in size.
00:03:49
Speaker
They've had their customers locked into them for actually decades, and now they can't do that. So for them, that's a big risk. Much of the work we're in winning is displacing people like that.
00:04:00
Speaker
For us, that's a huge opportunity in the
Expansion into Systems and Custom Solutions
00:04:03
Speaker
market. That combined with being as early as possible, first often now, to market with latest technology, means customers are really compelled to want to work with us.
00:04:13
Speaker
So can you tell us about your approach to technology innovation? you know in particular, your Kratos solution seems to be popular. Can you talk us through how you develop your technology roadmap? Yes, so we enjoy something called Titanium partnership status with Intel, which is very hard to get, which means that we get visibility of their products in detail six months or more ahead of the rest of the market. Our large competitors are also Titanium partner, i'm I'm sure, but nonetheless, that's a very important thing. So we work hand in glove with Intel,
00:04:46
Speaker
understanding their roadmap so that we can develop our roadmap alongside theirs. And we work very closely with key customers so that we can understand what their requirements are likely to be in one, two, five, even 10 years' time.
00:05:01
Speaker
And we bring together Intel's roadmap with the needs of our customers to create then our own product roadmap path. So I know what products we will likely be designing for the next five years, actually.
00:05:13
Speaker
We then have an extremely competent engineering and design team in the UK and a very strong customer support team. And those teams work together then on really fine-tuning that product roadmap.
00:05:25
Speaker
And we will always have a lead customer in mind for our latest products. Kratos. Kratos is fantastic. you know We launched Kratos in March. There is still not a competitor product to that product in the marketplace.
00:05:39
Speaker
We are the only company to, at the moment, be using that latest generation of Intel processor in a computer of this type. And indeed, earlier this year at the Global Embedded Computing Show, which very large show for this industry, on the Intel stand, our product was the one they featured because we are so early to market using their latest chipset.
00:06:02
Speaker
And can you talk about why you decided to expand into the systems business and kind of what you see the potential is there? Yeah, so these computer cards that we design and make in the UK, they slot into quite complicated boxes alongside other cards that do other things, graphics, storage, switches, things called FPGAs.
00:06:24
Speaker
And that box we call a system. So by now also offering systems, ah several things happen. We increase the market access for our cards, because if we're delivering cards into our own systems, that's that's more, more opportunity.
00:06:40
Speaker
systems are almost always custom solutions for customers. So it's a much more intimate dialogue with customers if you're delivering a system to them. So you get locked into their roadmap much more fully than if you just do the cards.
00:06:53
Speaker
And of course, the selling price for a system can be 10 or 20 times that of a card. So a system might be 150,000, 300,000 pounds per unit.
Acquisition Strategy and Technological Expansion
00:07:02
Speaker
three hundred thousand pounds per unit And in terms of acquisition activity, um you know what types of business would you consider? What what do they need to bring to concurrent?
00:07:13
Speaker
Yeah, we have said we are acquisitive and there's two kinds of company that we are looking at. It'll either be a company that provides technology that is already inside the box that we call a system.
00:07:25
Speaker
So increasing our share of the content of the system. Or it will be a company that does very similar technologies for us but um let's say nearby. So our products, for example, tend to be a particular physical size.
00:07:39
Speaker
You can also buy, in defense, rack mount servers, Intel rack mount servers, which are physically much larger computers, or you can buy things called small form factor computers, which are tiny.
00:07:50
Speaker
ah Again, dominated by Intel, it would broaden our capability And companies like that, there's quite a few of them around, particularly the United States, often founder-owned, and they typically don't have Intel Titanium status. They typically don't have global sales.
Impact of Defense Budgets and Production Cycles
00:08:09
Speaker
And so right from day one, if we find the right organization, we would aim to add value with the capabilities that we can bring. Thanks, Miles. And I think now we'll go over to Kim. So, Kim, could you tell us about ah expanding defence budgets and what they mean for concurring?
00:08:25
Speaker
So, expanding defence budgets are great, but they actually expand really, really slowly. There's lots of rhetoricical rhetoric around what's going to be spent in defence budgets.
00:08:35
Speaker
And actually more important for Concurrent is what's happening underneath those defence budgets. So upgrades, electronic upgrades, has become a really key part of the defence market at the moment because in order to get new technology into your platforms really quickly, the best way to do that is through upgrades, not through building new platforms. And that's very important to us. So it's more about market share for Concurrent, not the growth in defence budgets.
00:09:01
Speaker
And could you talk us through the cycle from designing through to production and also how you expect recent design wins to kind of drop through into revenue? Absolutely. So we've openly said in the last two years we've won 18 major design wins.
00:09:16
Speaker
I think it was 18, 22, 10 and 24. um Major design win is anything that generates over a million pounds per year revenue. And the cycle is very long it and it starts before the design wins. So the cycle starts from the point that a customer comes to us, they have a particular need. They will use our products to evaluate whether they're suitable for that need.
00:09:40
Speaker
So we sell them a few boards, which will be called evaluation boards. They will take some time in ah using those evaluation boards into their program, see if they work, if they're suitable. If they are, that's the point we get designed in.
00:09:53
Speaker
That can take in its own right six months to a year. And once we're designed in, an upgrade program has a lot of things around it. We're just a small part of that program. So the customer then has to go through a long qualification process.
00:10:08
Speaker
and So we say a design win will take anything from three years to get to production levels. And production levels, they're not all linear. They will, you know, they may start at a lower rate, building up to a full rate.
00:10:21
Speaker
These are big programs. So, you know, we say anything up to three years for the production revenues to start. What it
Plans for Manufacturing Expansion
00:10:29
Speaker
means for our revenue, which is really important, our design wins in 2023, but really should start in 2026. All about timing, as we've discussed. um so And then 2024, start in 2027. So as you can see, we start to get that layering effect on top of our revenue over and above what we're doing today.
00:10:49
Speaker
It's really key to our future growth. And you're planning to extend your manufacturing capacity. Can you talk me through kind of the timings, the the cost, the kind of size you're expecting to expand to, you and what that means for your revenue growth? Absolutely. So we always said we're probably at a capacity of around £40 million pounds at Colchester.
00:11:09
Speaker
It depends, of course, on mix of revenues. It could be a little bit more, a little bit less. We are obviously at that £40 million pounds mark. Our facility in Colchester is very, very tight. We've run out of room, basically.
00:11:20
Speaker
And we have looked at all the options, including staying at Colchester and coming up with some novel ideas to deal with the tightness there. and But the the solution we have gone with is we're going to move to another site in Essex. um It will be double the capacity we have today in terms of size. So we're going from something around 20,000 square feet to 40,000 square feet.
00:11:43
Speaker
We will, at the same time as moving, we will be doubling our manufacturer manufacturing capacity. So we will buy two new surface mount lines first, get them up and run in our new facility.
00:11:55
Speaker
So we have revenue capacity going all the time whilst we're in that period of move. The move will happen in around the end of 2026. It is a brand new build. So as we know, all these things can slip. So I'd say late 26, early 27. We don't have an issue with capacity per se, because what we can do is if we get into 2026 and we're running out of capacity in our own factory, we can contract out. We can use contract manufacturers that do this all the time.
00:12:27
Speaker
And it's really important for us to have our own factory because we believe in we want to have control over what we manufacture and
Revenue Targets and Future Growth
00:12:35
Speaker
when. And that's really important when you have ah an engineering and development development section to your business.
00:12:42
Speaker
Finally, could you outline your targets for the coming year and the medium term? So, our concurrent does not actually forecast in the market. Our broker's forecast, and at the moment, the broker's forecast for 2025 is £43 million of revenue and £6 million a profit.
00:13:00
Speaker
And in the broker's forecast, you'll see a quite an increase from that up to £57 million and just under £10 million profit in 2027. This is because 25 is it's more a repeat of a normal year. So the growth is coming from us doing things better, starting to get some early design wins in there, you know, a bit production runs, et cetera, but very low rate with a view that 26, 27 is when we start to see a kick up in revenue. We are comfortable with the four the forecast the brokers have in the market at the moment.
00:13:33
Speaker
Great. Okay. Well, thanks both of you for coming in. Thank you.