DMXCP Monthly ReportJuly 2026 – DMX
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An investment company managed by
DMX Asset Management Limited ACN 169 381 908 AFSL 459 120 13/111 Elizabeth Street, Sydney, NSW 2000 DMXCP directors Roger Collison, Dean Morel, Steven McCarthy |
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Dear Shareholder,
DMXCP’s NAV increased 3.3% (after all accrued fees and expenses) for July 2026. The NAV as at 31 July 2026 was $2.8749, compared to $2.7831, as at 30 June 2026. The All-Ordinaries Accumulation Index increased 2.3%, while smaller companies had a tougher month - the Small Ordinaries declined 3.2% and the Emerging Companies Index fell 5.1%.
July Performance
July saw small and micro-cap names remain very much out of favour with the Small Ordinaries and Emerging Companies Indices both now having fallen ~13% since the start of the year. Against that backdrop, our portfolio performed solidly, benefitting from several strong operational updates, together with some corporate activity at the end of the month.
During the month positive contributions came from 8 Common (ASX:8CO) which was up 63% following a strong fourth quarter update, while tuition provider Kip McGrath (ASX:KME) increased 33% after receiving an unsolicited takeover offer. It was also pleasing to see Pure Profile (ASX:PPL) recover 32% after confirming its full year guidance, having been harshly sold down in recent months. The significant detractor was fintech Change Financial (ASX:CCA) which fell 33% after confirming its FY26 guidance but flagging its FY27 performance would be impacted by the loss of a legacy client.
Company updates
July was a busy month for both fourth quarter (April to June) and year end updates. Among our key holdings these included:
We also saw mostly encouraging news from some of our smaller positions that reported their fourth quarter cash flow updates:
Takeover interest
During the month we saw two portfolio companies announce takeover interest from offshore strategic buyers, which suggests that public markets continue to undervalue small companies, relative to what they could be worth in the hands of a strategic acquirer.
Concluding thoughts
The new financial year has started positively, with takeover interest and operational updates continuing to support the value we believe is on offer in our portfolio. As we noted last month, we are confident in the upside across our diverse and unique portfolio of attractively priced, growing, under-the-radar companies. We remain focused on our long-term strategy of buying growing companies with low market capitalisations and attractive valuations, which positions us well for long-term material upside as our portfolio companies grow and become more widely known.
Thank you for your continued support and we look forward to updating you next month.
DMXCP’s NAV increased 3.3% (after all accrued fees and expenses) for July 2026. The NAV as at 31 July 2026 was $2.8749, compared to $2.7831, as at 30 June 2026. The All-Ordinaries Accumulation Index increased 2.3%, while smaller companies had a tougher month - the Small Ordinaries declined 3.2% and the Emerging Companies Index fell 5.1%.
July Performance
July saw small and micro-cap names remain very much out of favour with the Small Ordinaries and Emerging Companies Indices both now having fallen ~13% since the start of the year. Against that backdrop, our portfolio performed solidly, benefitting from several strong operational updates, together with some corporate activity at the end of the month.
During the month positive contributions came from 8 Common (ASX:8CO) which was up 63% following a strong fourth quarter update, while tuition provider Kip McGrath (ASX:KME) increased 33% after receiving an unsolicited takeover offer. It was also pleasing to see Pure Profile (ASX:PPL) recover 32% after confirming its full year guidance, having been harshly sold down in recent months. The significant detractor was fintech Change Financial (ASX:CCA) which fell 33% after confirming its FY26 guidance but flagging its FY27 performance would be impacted by the loss of a legacy client.
Company updates
July was a busy month for both fourth quarter (April to June) and year end updates. Among our key holdings these included:
- Higher education provider EDU Australia (ASX:EDU) announced it expects its revenue to increase 48% (to $53.5m) for the 6 months to 30 June, with PBT of $13.0m, up 57%. EDU’s net cash of $24.0m at 30 June 2026, is up $5.5m from 31 December 2025 as strong cash receipts more than offset the $3.8m dividend paid and $11.4m of share buybacks undertaken during the half. With two of the three Ikon semester intakes for the year now locked in, EDU is on track for a very strong NPAT for the 12 months to 31 December 2026. Attention now turns to the third semester intake - this will be the first intake fully impacted by a change to how agents are remunerated for onshore recruitment.
- Data and insights provider Pureprofile (ASX:PPL) reported a 14% increase in FY26 revenue to $65m and a 25% increase in EBITDA to $6.5m (which would otherwise have been a 41% increase if excluding forex movements). PPL’s rest of the world revenue of $31.6m was up 20% on FY25, while ANZ returned to growth, delivering revenue of $33.4m, up 8% on FY25 (6% growth achieved on an organic basis). PPL finished FY26 with a stronger balance sheet, with $4.3m of net cash, up $1.1m, despite funding the CRNRSTONE acquisition during the year. As we look forward to FY27, we expect continued strong organic growth, particularly in the US and UK, which will result in further operating leverage, as well as the full year benefit from CRNSTONE and savings from staff restructuring undertaken during FY26. Together, all this should position PPL for another positive year, extending its five-year track record of 20% CAGR revenue and EBITDA growth.
- Verbrec (ASX:VBC) an engineering business focussed on the mining, energy, water and defence markets, confirmed its full year guidance, albeit at the lower end of its expected range, at $8m- $9m EBITDA. With a strong pipeline and work in hand, VBC were comfortable to give FY27 guidance with a range of $10m - $12m EBITDA. We would expect this estimate to grow through the year, as further pipeline conversion occurs and synergies from VBC’s recent acquisition of Alliance Automation are realised. The Alliance Automation acquisition deepens VBC presence in automation, cyber security and digital solutions, which are all supported by strong tailwinds. VBC is now looking to capitalise on opportunities in relation to operational technology, cyber security and industrial automation in the energy, mining and water markets, as well as its traditional gas market transition, electrification and energy storage focus. VBC continues to trade on multiples of less than half of those of its larger peers.
We also saw mostly encouraging news from some of our smaller positions that reported their fourth quarter cash flow updates:
- Fintech travel expense management company 8common (ASX: 8CO) reported an encouraging $0.9m EBITDA profit for the FY26 year, and importantly, its maiden PBT. 8CO’s ARR reached $5.4m, having grown at a 3-year CAGR of 12%, while its recent strong cash generation has enabled all its debt to be repaid. The other significant development during the month was securing the ATO as a new client with a TCV of $1.9m over 3 years. This contract will add a further 20k government users to the 8CO platform, and with implementation expected to be completed during FY27, provides 8CO with a pathway for strong ARR growth (>$0.5m per annum) at more than 80% gross margins. 8CO enters FY27 as profitable, debt free, cash generative and has strong growth locked in, and with its market capitalisation still below $10m, we believe it represents an attractive set-up for what is a genuinely under-the-radar yet high-quality business.
- Another interesting result came from information and knowledge management SaaS company Knosys (ASX:KNO). KNO delivered a record positive net operating cash flow in Q426 of $3.1m. This was a result of the high level of cash receipts which includes the payment in advance of $3.8m in license fees from ANZ Bank for its two-year contract extension for the use of Knowledge IQ, together with its structurally lower cost base. Based on its month end market-cap of $5.4m and net cash at 30 June 2026 of $4.9m, KNO’s current $9m ARR is being valued by the market at $500k.
- As mentioned above, a disappointing update during the month came from payments infrastructure platform provider, Change Financial (ASX:CCA). CCA confirmed its FY26 guidance of $4.7m on the back of a 3-year revenue CAGR of 28%. However, this positive result was somewhat offset by news that CCA expect churn in its legacy on-premises clients as they migrate away from CCA. Management noted that these client movements are driving some short-term impacts on revenue and creating uncertainty in one-off and legacy Vertexon revenue for FY27. While disappointing, we do not consider this to be a thesis breaker as CCA continues to grow its hosted customer base, but the churn of these legacy clients has lowered our profit expectations for FY27.
Takeover interest
During the month we saw two portfolio companies announce takeover interest from offshore strategic buyers, which suggests that public markets continue to undervalue small companies, relative to what they could be worth in the hands of a strategic acquirer.
- Global tuition provider KME, received a 73c off-market takeover offer from Crimson Education, a global university admissions consultancy and education business. KME has been a long-term holding of ours – we like KME’s strong global network and brand reputation it has developed over 50 years, which today generates network revenue of > $100m and annual post tax free cash flow of $4m - $5m. While Crimson’s offer was at a 62.2% premium to KME’s last closing price and a 54.0% premium to its one-month VWAP, it represents a modest 6.5x KME’s expected free cash flow in FY27. Assuming ~$1m of synergies available to be realised by the bidder, then this multiple drops to well under 6x KME’s free cash flow. Whilst there are concerns around KME’s growth profile, we believe the offer, at a $33m enterprise value, substantially undervalues both the cash flow generation potential of KME, and the costs to replicate and build out a $100m+ global tuition business. We are hopeful of an improved offer here; to better reflect this inherent value we are giving up as shareholders.
- Energy One Limited (ASX:EOL) a leading global supplier of energy trading and software systems and services and another long-term holding of ours, received a takeover offer at $17 from Volue SA, a European competitor, at a 56.6% premium to its last closing share price. EOL noted the proposal was unsolicited, indicative, non-binding and conditional and was rejected by the EOL board as opportunistic and which did not reflect EOL's strong competitive position in the markets in which it operates. EOL has a strong growth outlook, with organic recurring revenue growth forecast in the range 15% - 20% per year, together with targeting of cash-EBITDA margins of around 30%. Volue itself was taken private at a multiple of EV/EBITDA of 25x versus the 20x it has bid for EOL. EOL would provide Volue with a competitive, modernised software stack and a strong European and dominant Australian customer base, and we expect Volue to have the capacity to increase its bid.
Concluding thoughts
The new financial year has started positively, with takeover interest and operational updates continuing to support the value we believe is on offer in our portfolio. As we noted last month, we are confident in the upside across our diverse and unique portfolio of attractively priced, growing, under-the-radar companies. We remain focused on our long-term strategy of buying growing companies with low market capitalisations and attractive valuations, which positions us well for long-term material upside as our portfolio companies grow and become more widely known.
Thank you for your continued support and we look forward to updating you next month.
