Whispir Limited

WSP Details

Recent Updates: Whispir Limited (ASX: WSP) offers a software-as-a-service (SaaS) based communications workflow platform to automate interactions between people and businesses. WSP operates in Asia, ANZ (Australia and New Zealand), and North America.

• On 29 December 2021, Director, Brendan Fleiter purchased ~47,100 shares at ~$2.040 average per share for ~$96,084.
• On 10 December 2021, Director, Jeromy Wells acquired ~218,625 performance rights (ASX: WSPAB) as per an employee option plan.
• On 7 December 2021, Regal Funds Management Pty Ltd (RFM), a substantial shareholder, decreased his voting rights from ~10.79% to ~9.77% in WSP.

Contract with Singtel: Recently, WSP inked a three-year agreement with Singapore Telecommunications Limited (Singtel) for at least ~SG$1.3 million contract value for software licence and professional services fees. WSP expects to generate transactional usage fee revenue from the contract.

Digging into AGM & 1QFY22 Highlights:

• The Communications Platform as a Service market is forecasted to reach ~$8 billion in the next 5 years. WSP plans to evolve its communications intelligence products to tap the long-term revenue growth avenues. In FY22, WSP plans to fast-track its product roadmap and invest in marketing and sales opportunities to drive customer acquisition.
• WSP is witnessing robust tailwinds resulting from the digitisation and digital transformation megatrends globally.
• The ARR (annualised recurring revenue) increased to ~$56.8 million in Q1FY22, depicting a rise of ~31.8% on the pcp. The gross revenue churn on a YTD (year to date) basis was ~2.1%, an improvement on a year-to-year (YoY) basis.
• An investment of ~$4.1 million was done on R&D in Q1FY22, to grow platform functionality with automation capabilities.
• WSP incorporated Facebook Messenger in its Conversations product and plans to offer it soon to its customers.

Key Financials; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of technological upgrades, forex changes, COVID-19 uncertainty, customer behaviour changes, and supplier concentration risk.  

Outlook:

• Revenue Guidance: WSP has upgraded its FY22 revenue guidance from ~$57.2 - $60.2 million to ~$64 - $68 million, an improvement of ~34% - ~42% in revenue over FY21.
• EBITDA Guidance: The EBITDA loss excluding non-cash share-based payments is now expected between ~$13.20 - $11.20 million instead of $15.5 - $13.0 million, given previously for FY22.

 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 stock of WSP gave a positive return of ~42.46% in the past month and a positive return of ~21.49% in the past three months. The stock is currently trading below the 52-weeks’ average price level band of $1.760 - $4.510. The stock of WSP has a support level of ~$2.62 and a resistance level of ~$3.42. The stock has been valued using the Enterprise Value to Sales based illustrative relative valuation method and arrived at a target price with a correction of a low double-digit (in % terms). The company might trade at some discount than its peers’ median EV/Sales multiple, considering the continuing trend of net losses, negative operating cashflows, and an increase in marketing and R&D spend in Q1FY22. For this purpose of valuation, a few peers like Adacel Technologies Limited (ASX: ADA), Class Limited (ASX:CL1), Iress Limited (ASX: IRE), and others have been considered. Considering the mounting losses, net cash outgoings in Q1FY22, an indicative downside in valuation, steep rally in the past few months, and associated key business risks, we suggest investors to book profit and give a ‘Sell’ rating on the stock at the current market price of $2.910, as of 18 January 2022, 10:50 AM (GMT+10), Sydney, Eastern Australia.

WSP Daily Technical Chart, Data Source: REFINITIV 

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

Note 2: Investment decision 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 Valuation has been achieved and subject to the factors discussed above.

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