Whispir Limited

WSP Details

Change in Shareholding: Whispir Limited (ASX: WSP) is a software-as-a- service (SaaS) firm providing communication management systems through a cloud-based platform that automates interactions between businesses and people. On 9 September 2021, AustralianSuper Pty Limited increased its shareholding in WSP from 5.05% voting power to 6.11%.

New CFO Announced: On 10 September 2021, WSP announced the appointment of Jenni Pilcher as CFO, effective 1 November 2021.

A Quick Look at FY21 Key Results:

• Higher Revenue: The company witnessed a CAGR of 22% in total revenue for a period of 4 years (2017-2021). The revenue increased to $47.7 million in FY21, up by 22.1% YoY, due to ARR growth and higher usage amongst available customers.
• Healthy Balance Sheet: WSP has $49.2 million of cash and equivalents after the capital raise of $45.9 million in Q3FY21. The company ended the period with debt balance of $2.82 million.
• Net Customer Addition: WSP added 171 net new customers in FY21, with ~94 added in 2HFY21.

The Trend of Total Revenue Growth from FY17-FY21; (Analysis by Kalkine Group)

Key Risks:

• Intellectual Property Risk: The company must develop its own IP and protecting it to ensure no infringement of third-party rights.
• COVID-19 Impact: The company witnessed a delay in new customer activations in the Asian market due to the COVID-19 impact.   

Outlook:

• For FY22, WSP is well-capitalised to undertake product development, fast-track customer acquisition especially in North America and witnesses significant growth avenue in the SME and SMB segments.
• The company estimates ARR growth upto $65.4 - $70.0 million (up by 22-31% YoY), revenue increase within $57.2 - $60.2 million and operating EBITDA loss between $15.5 - $13.0 million in 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 negative return of 20.07% in the past three months and a negative return of 38.48% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level of $2.100 - $4.510. The stock has been valued using an Enterprise Value to Sales based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount than its peers’ median, considering its net loss, net operating cash outflows, and the risks associated with the COVID-19 uncertainty, global exposure to new regions, and forex changes. For the purpose of valuation, few peers like Infomedia Limited (ASX: IFM), Iress Limited (ASX: IRE), Damstra Holdings Limited (ASX: DTC) have been considered. Considering the current trading levels, growth in ARR, net customers, platform usage, and no long-term debt in FY21, the growth forecast for FY22, and valuation, we give a ‘Speculative Buy’ rating on the stock at the current market price of $2.160 as on 17 September 2021, 10:30 AM, (GMT+10), Sydney, Eastern Australia. Investors with high-risk appetite should evaluate this stock in view of the technical support and resistance levels as well as taking into consideration associated risks in technological changes, regulator measures in new markets, and foreign currency risks.

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.

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.

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