Marlowe plc, the UK compliance services giant, might seem like an unlikely candidate for a tech breakout story. After all, their bread and butter is helping companies navigate the labyrinthine world of fire safety, water hygiene, and employment law – not exactly the sexiest corners of the business world. But tucked away in their latest earnings call transcript lies a tantalizing hint that Marlowe is quietly orchestrating a much more ambitious play: building a dominant SaaS platform in the burgeoning governance, risk, and compliance (GRC) market.

While analysts have rightly focused on Marlowe's impressive growth – 6% organic revenue growth in a challenging economic environment – and their ongoing integration of a dizzying array of acquisitions (36 in the past two years alone!), something far more profound may be brewing beneath the surface. Marlowe's recent strategic acquisition of IMSM, a leading ISO certification provider, is not just another bolt-on deal. It's a calculated step towards creating a comprehensive SaaS ecosystem that could transform how businesses manage compliance.

Here's the key insight: IMSM offers a recurring service to 6,000 customers annually, helping them achieve ISO certification across a wide range of standards. This is a high-margin, recurring revenue business that, until now, has been largely untouched by digital disruption. Enter Marlowe, armed with a strong software development team and a vision to turn IMSM's advisory service into a cloud-based platform. Imagine a world where companies can monitor and track their ISO compliance in real-time, all through a single, user-friendly interface. This is exactly what Marlowe is building.

But it goes beyond just ISO certification. Marlowe's GRC division encompasses a suite of services and software products addressing everything from health and safety to employment law to compliance eLearning. The common thread? They all target the growing need for businesses to manage their regulatory burdens effectively. And increasingly, Marlowe is leveraging technology to deliver these services, creating a compelling value proposition for clients looking to streamline their compliance processes.

Let's look at the numbers. Software as a service currently accounts for roughly 25% of Marlowe's profitability. Now, imagine the potential if they successfully transition IMSM's 6,000 customers to a recurring SaaS model. Assuming an average revenue per user of even £1,000 per year (a conservative estimate), this could add another £6 million in annual recurring revenue, significantly boosting Marlowe's SaaS footprint. And this is just the beginning. The ISO certification market is vast and largely unvendored, offering ample opportunity for further growth.

Potential Revenue Growth from IMSM SaaS Transition

The following chart illustrates the potential increase in annual recurring revenue (ARR) if Marlowe successfully transitions IMSM's customer base to a SaaS model, using conservative assumptions.

The implications are clear: Marlowe is positioning itself to become a force to be reckoned with in the GRC software market. While traditional compliance services may still form the bedrock of their business, the potential of their SaaS platform is becoming increasingly evident. And with their strategic review exploring a potential separation of their GRC technology activities, the stage is set for a dramatic transformation.

Consider this: if Marlowe successfully spins off its GRC technology division, it could unlock significant value for shareholders. A pure-play SaaS company with a strong track record and a growing customer base could command a premium valuation in the public markets. We're talking about a potential unicorn in the making, hidden within the seemingly mundane world of compliance services.

Of course, this is still a hypothesis, and the success of Marlowe's SaaS play hinges on several factors, including their ability to effectively integrate IMSM, develop a compelling software platform, and successfully navigate the competitive landscape. But the potential is undeniable.

So, the next time you hear the name Marlowe plc, don't just think about fire alarms and water testing. Remember that they might be quietly building the next great SaaS success story, one compliance module at a time.

Hypothesis:

Marlowe's acquisition of IMSM, coupled with their existing GRC software capabilities, indicates a strategic focus on building a comprehensive SaaS platform for the compliance market. The transition of IMSM's 6,000 customers to a recurring SaaS model could add significant revenue and boost Marlowe's valuation. A potential spin-off of Marlowe's GRC technology division could unlock even greater shareholder value.

Numbers:

IMSM customer base: 6,000. Potential annual recurring revenue from IMSM: £6 million (assuming £1,000 ARPU). SaaS contribution to Marlowe's profitability: 25% (currently).

While the ultimate outcome remains to be seen, Marlowe's stealthy SaaS play deserves close attention. The signs point to a potential tech breakout story waiting to happen, one that could redefine the compliance landscape and propel Marlowe into a new era of growth and profitability.

"Fun Fact: The global GRC market size was valued at USD 40.24 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 12.9% from 2023 to 2030. Source: Grand View Research This presents a massive opportunity for Marlowe to capitalize on with its emerging SaaS platform."