Bigtincan Holdings Limited

BTH Details

1HFY22 Operational and Financial Highlights: Bigtincan Holdings Limited (ASX: BTH) provides a leading AI-powered sales enablement automation platform. During the half-year ended 31 December 2021 (1HFY22), the company recorded a growth of 132% in Annualised Recurring Revenue (ARR) to $112 million, indicating the company’s efficiency to scale operational excellence as well as to invest in growth at the right levels to continue the market momentum.

• The company reported revenue amounting to $45.9 million, reflecting a rise of 142% over pcp, and adjusted EBITDA for the period amounted to $1.2 million.
• BTH wrapped up the acquisition of Brainshark, which is adding operating scale to the business, and synergies helped the company to drive improvement in adjusted EBITDA position in years to come.
• The company recorded positive operating cashflow of $1.1 million in Q2FY22. As a result, it witnessed improvement in operating cash outflows to $2.4 million in 1HFY22 against $8.6 million in 1HFY21. As on 31 December 2021, the company had a cash balance of ~$49.9 million.

ARR Trend (Source: Analysis by Kalkine Group)

Key Risks: The company’s operational and financial performance could be impacted by the rising market share of peers in the industry in which it operates. In addition, the business could be affected by a shift in new technology.

Outlook: The company seems to be well-placed to take benefit of the growing platform market in sales enablement to win new logos and enhance existing customers with cross-sell and upsell opportunities which are expected to be strong in 2HFY22. For FY22, the company is expecting to deliver ARR and revenue of over $119 million and $109 million, respectively. 

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative) 

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks

Stock Recommendation: The company is trading near to its 52-week low level of $0.700, offering a decent opportunity for accumulation. The stock of BTH has been corrected by ~22.89% in the past three months. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers’ average EV/Sales multiple, considering the COVID-19 uncertainties, and continuing negative margin, and high market volatility due to Russia and Ukraine crises, etc. For the purpose of valuation, peers such as Nearmap Ltd (ASX: NEA), ELMO Software Ltd (ASX: ELO), LiveTiles Ltd (ASX: LVT), and others have been considered. Considering the indicative upside in valuation, growing revenue, increasing ARR, recent acquisition, decent long-term outlook, current trading level and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.720 as on 25 February 2022, ~10:30 AM (GMT+10), Sydney, Eastern Australia.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

BTH Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.