Following the chat with Stephen, I can see why RTH has been trending up the Strawman rankings. Super interesting business...

Let us count the ways:

• Global leader with no obvious direct competitor, servicing the largest players in the industry
• Highly sticky customer base (never lost a major client in 25 years), with substantial switching costs
• Significant barriers to entry (regulatory, key relationships with data originators)
• Fast growing sector
• Significant revenue growth with early signs of effective scaling
• Sound balance sheet, no debt and >$5m cash (Stephen said they were unlikely to need additional capital)
• Successful expansion into foreign jurisdictions
• Founder family run (Stephen's dad started the business, and has a 17% stake)
• Stephen is independently a successful entrepreneur, having had a 8-figure exit on his consulting tech business
• Offering is mission critical for clients
• Largely recession proof business
• Contracts linked to CPI (so somewhat inflation proof)
• Virtually all revenue is recurring in nature
• Access to data gives them a genuine edge in terms of AI
• 80% gross margins

The negatives seem to be one of regulation and negative perception of online wagering. Personally, I'm not a fan of some of the apps that push gambling but it's hard to imagine that the industry would be blacklisted in any serious way (if only because of the tax it generates). Actually, Stephen mentioned tax as a potential worry -- maybe the governments in the jurisdictions they operate in decide to levy higher taxes?

But, on balance, it seems pretty interesting. Especially with shares on only ~35x earnings, which isn't that high given compound top line growth of 39%pa, on average, over the last few years. Especially if they can continue to flex their cost base with greater efficiency.

I am adding a small position on SM. (Sadly, I have no spare funds in real life)

Anyway, here is the transcript: RTH Transcript.pdf