Bandwidth Inc

Bandwidth Inc (Nasdaq: BAND) provides enterprise cloud communications services globally. Its services include messaging, cloud-ready voice, and emergency services.

Investment Highlights – HOLD at USD 129.84

• In Q1 FY21, BAND reported a 64% increase in active CPaaS customers. Meanwhile, the dollar-based net retention rate remained strong and in line with Q1 FY20.
• In Q2 FY21, CPaaS revenue is expected to be in the range of US$101.2 million to US$102.2 million.
• Bandwidth is well-positioned to capitalize on opportunities accelerated in the enterprise-grade cloud communications market with the remote working environment.
• From a technical standpoint, 14-day RSI (48.25) seems favourable and supports the stock price's upside potential. Moreover, the stock price has trading close to the lower Bolling Band, reflecting an oversold position.
• Over the past five years (FY15 to FY20), revenue surged at a CAGR of around 20.01%.

Key Risks

• Bandwidth operates in the rapidly changing and highly competitive market, while the resurgence in the Covid-19 can create operational challenges for the Company. Therefore, the Company can fail to attract new customers.
• The revenue streams are concentrated on limited number of enterprise customers, and thus, the Company is exposed to significant credit risk as well.
• Amid rising uncertainties, Bandwidth might fail to achieve the expected synergy from the Voxbone acquisition.

Recent News

CFO Appointment: On 8 July 2021, Bandwidth appointed Daryl Raiford as its new Chief Financial Officer, effective from August 2021.

Q1 FY21 Financial Highlights (for three months ended 31 March 2021, as of 7 May 2021)

 (Source: Company Website)

• During Q1 FY21, Bandwidth delivered a strong start with 66% revenue increase against Q1 FY20.
• The CPaaS revenue increased by 69% year-on-year in Q1 FY21, while the net retention rate stood at 125%.
• Similarly, gross profit increased to US$52.2 million in Q1 FY21 from US$32.2 million in Q1 FY20.
• The net loss for Q1 FY21 was US$5.3 million, while the adjusted EBITDA improved to US$13.4 million (Q1 FY20: US$3.1 million).

One Year Share Price Chart

(Data Source: REFINITIV, Analysis done by Kalkine Group)

Valuation Methodology: EV/Sales Approach (Illustrative) 

Conclusion

Bandwidth reported a significant improvement in the top-line through Q1 FY21. For FY21, the Company expects to report US$417.6 million to US$420.6 million in CPaaS revenue. Subsequently, total revenue is projected to be in the range of US$473.1 million to US$476.1 million in FY21. However, short-term outlook is uncertain given the Covid-19 disruption and loss-making financial conditions. Therefore, we do not recommend fresh buying in the current scenario. The stock made a 52-week high and low of USD 198.61 and USD 107.01, respectively.

 Based on the strong revenue guidance, bright industry outlook and valuation method used above, we have given a "HOLD" stance on Bandwidth Inc at the closing market price of USD 129.84 (as of 12 July 2021), while we look forward to reviewing the H1 FY21 results.

Canoo Inc

Canoo Inc (Nasdaq: GOEV) develops electric vehicles and designs modular electric platforms. It delivers a wide range of vehicle applications for businesses and consumers.

On 21 December 2020, a special purpose acquisition entity, Hennessy Capital Acquisition Corp. IV completed the business combination with Canoo Inc, and began trading (from 22 December 2020) as a combined entity on the Nasdaq Global Select Market under the ticker symbols "GOEV". Therefore, the earlier given recommendation on the delisted entity-Hennessy Capital Acquisition Corp. IV was closed at the closing price on the last trading day i.e., 21 December 2020 at US$19.49, as per data from the secondary sources.

Investment Highlights – HOLD at USD 9.11

• On 17 June 2022, Canoo announced Oklahoma as the location for its US manufacturing facility, to meet its commitment to start production in Q4 FY22.
• Canoo has the potential to cater wide array of customers through its proprietary flat platform with near-term vehicle production in pipeline.
• The Company has completed more than 70 physical crash tests on the Lifestyle Vehicle configuration. Moreover, it has expanded its Beta fleet to 32 properties and 13 drivable units.
• From a technical standpoint, 14-day RSI (47.50) is in the oversold zone, while the stock price is close to the lower Bollinger Band.

Key Risks

• Canoo’s share price can get hit by the lawsuit regarding its US$2.4 billion merger with a blank check Company. In addition, the Company has three other lawsuits as well in federal court for publishing misleading information.
• The ability to scale in a cost-effective manner and product development line can be distorted with operational uncertainties arising from the Covid-19 induced challenges.
• It is an early-stage entity with a history of losses. Moreover, the Company is yet to achieve positive operating cash flows.

Recent News

Manufacturing Partner: On 17 June 2021, GOEV named VDL Nedcar as its contract manufacturing partner for developing electric vehicles.

Q1 FY21 Financial Highlights (for three months ended 31 March 2021, as of 17 May 2021)

 (Source: Company website)

• During Q1 FY21, the Company did not generate any revenues; however, it was able to reduce net loss and comprehensive loss against Q1 FY20.
• It also announced an electric power research collaboration with University of Wisconsin.
• The Company also opened pre-orders for Lifestyle Vehicle and Pickup Truck.
• As of 31 March 2021, there was US$641.9 million in cash and cash equivalents.

Share Price Chart

 (Data Source: REFINITIV, Analysis done by Kalkine Group)

Conclusion

During Q2 FY21, Canoo anticipated operating expenses to be in the range of US$65 million to US$75 million, while it planned to incur US$45 million to US$55 million as capital expenditure. The Company has achieved some significant milestones pertinent to manufacturing and research collaboration, and it is on track to meet its commitment on targeted production. However, there are uncertainties regarding raw-material shortage and demand outlook in the short-run. Therefore, fresh buying is not commended at the current level. Notwithstanding, the Company has accelerated its innovation and intellectual property developments and looks promising in the longer run. The stock made a 52-week High and Low of USD 24.90 and USD 6.51, respectively.

Based on the recent developments, strategic partnerships, solid liquidity, we have given a "HOLD" stance on Canoo Inc at the closing market price of USD 9.11 (as of 12 July 2021), while we look forward to reviewing its estimated revenue potential.  

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

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