Bigtincan Holdings Limited

BTH Details

Q2FY20 Cash Receipts up by 102% on PCP:Bigtincan Holdings Limited (ASX: BTH) provides sales enablement technologies to its clients for improving the performance of their sales teams and enhancing sales productivity.

December Quarter Highlights: The company recently provided an update for the quarter ended 31 December 2019 (Q2FY20). During the period, annualised recurring revenue went up by 55% on the prior corresponding period, reflecting the positive outcome of new customer wins, expansion across existing enterprise customers, and funds infused into supporting the growing customer base.


Growth in ARR (Source: Company Reports)

Cash Position: Customer cash receipts for the period came in at $9.1 million, up by 102% on the previous corresponding quarter. In comparison to the previous quarter, receipts went up by 70%. Operating cash payments for the quarter went up by 39%, majorly due to costs associated with the acquisition of Asdeq Labs Pty Ltd and Xinnovation, Inc, and expenses related to integration of acquisitions. At the end of the period, cash and cash equivalents of the company stood at $27.4 million.

Other Key Highlights:During the quarter, the company reported various new customer wins including, Mastercard, Waters Corporation, Disys, American Ortho, etc. A major contract valuing $2.8 million was signed with Sephora for a period of 3.5 years, reflecting the strengthening foundation in the retail vertical. Asdeq, which was acquired in September 2019, was completely integrated into Bigtincan’s business, providing additional capabilities and customers. In October 2019, the company acquired Xinnovation, Inc., which will provide enhanced capabilities in the financial services sector.

Valuation Methodology:Price to Book Multiple Approach

Price to Book Based Valuation (Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The stock of the company generated positive returns of 40.40% over a period of 6 months. Over a period of 1 year, the stock generated whopping returns of 114.03%. Currently, the stock is trading at its 52-week high level of $0.860 and has a market capitalisation of $214.31 million. The company reported robust results for the December quarter, backed by new contracts, investment in new people, technology and marketing programs, substantial uplift in cash receipts, acquisitions, etc. Acquisitions that have already been integrated into the business or are under process of integration, have added considerable value and are expected to remain a key catalyst for future growth as well. Moreover, the business seems sufficiently funded to execute on its growth plans and support positive outcomes for FY21 and beyond. We have valued the stock using Price to Book based relative valuation method and arrived at a target price depicting a correction of single-digit (in % terms). While the stock has delivered substantial returns over the past one year and is currently trading at 52-week high levels, we are of the view that most of the positives are factored in at the current juncture. Considering the above stated facts, we have a watch stance on the stock at the current market price of $0.865, up 24.46% on 22^nd January 2020, on account of update on December quarter performance.

 
BTH Daily Technical Chart (Source: Thomson Reuters)
 
 

Pushpay Holdings Limited

PPH Details

Decent Guidance for FY20:Pushpay Holdings Limited (ASX: PPH) provides a donor management system to the faith sector, NPOs, and education providers. The company recently notified that Kabouter Management, LLC became a substantial shareholder, with a voting power of 5.016%.

On 13^th December 2019, the company updated the market that it has entered into a combined business agreement with Church Community Builder, a US-based leading provider of ChMS solutions to over 4,000 churches in the US faith sector. The new business combination will provide a total of 10,000 customers with market-leading technology solutions. Church Community Builder has been fully acquired by Pushpay for a total cash consideration of US$87.5 million, funded through cash in hand and an amortising senior secured debt facility worth US$62.5 million.

Half-Yearly Highlights: During the half-year ended 30 September 2019, total revenue amounted to US$57.4 million, up by 30% on prior corresponding period revenue of US$44.0 million. Growth during the period was supported by targeted implementation of strategy, investment into product design and development, and growing team capabilities and expertise. Gross margin for the six months period improved by eight percentage points as compared to the prior corresponding period and stood at 65%. Total processing volume went up by 45% to US$2.2 billion, which is expected to grow further on the back of a large proportion of new, medium and large customers, increased operations in the US, and further development of the product set to promote higher adoption and usage.


Income Statement (Source: Company Reports)

Outlook & Guidance: Operating revenue for the year ending 31 March 2020 is expected to be in the range of US$121.0 million – US$124.0 million, with a gross margin of over 63%. EBITDAF is expected between US$23.0 million – US$25.0 million. Total processing volume for the period is expected between US$4.8 billion – US$5.0 billion. Over the medium-term, the company is targeting to gain further market share to maximise shareholder value. It is eyeing for potential acquisitions that can add significant value to the current business.

Valuation Methodology: EV/Sales Multiple Approach

EV/Sales Based Valuation (Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The stock of the company generated returns of 41.69% over a period of 3 months. The stock as on 22 January 2020, made new 52-week high of $4.350 and manged to close the session at this level. The company reported decent results in the first half of FY20 and expects to deliver further growth for the second half, with an uplift in revenue, gross margin and total processing volume. In the long-term, the company aims to tap half of the medium and large church segments that can deliver over US$1 billion in annual revenue. We have valued the stock using EV/Sales based relative valuation method and arrived at a target price offering limited upside in % terms. Hence, we recommend a “Hold” rating on the stock at the current market price of $4.350, up 4.067% on 22^nd January 2020.

 
PPH Daily Technical Chart (Source: Thomson Reuters)

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