Zutec develops and markets cloud-based software services (“SaaS”) with a focus on companies in the construction and real estate sector. Its products help its customers to increase productivity and cost efficiency. Zutec offers solutions in project management, coordination tools for data and document administration, data-enriched 3D-models, defect management, project handovers, and operation and management of buildings. The company’s main product is its platform, which can be described as a cloud-based database. The company can also link several of its modules to this platform to increase functionality based on customer needs.
The construction sector is one of the world’s least digitalized sectors. We think Zutec has an opportunity to be a part of this digital transformation. The company has recently announced a change in its strategy and now aims to focus on smaller companies. This should result in higher revenues, as the total customer base increases, as well as greater market exposure. The new strategy could also offset Zutec’s natural churn, which occurs as it moves from project to project.
Zutec’s customers operate in the construction sector, which is a cyclical sector. Hence, cutbacks in investments could affect Zutec negatively. Although Zutec has some life-long recurring revenues in its business model, the majority of revenues end when a project is completed. Zutec therefore must continuously find new projects. Also, we believe it can sometimes be challenging for a smaller player to sell to bigger companies and projects, which historically has been its targeted group.