Bigtincan Holdings Limited

BTH Details

Revision of FY19 Revenue Guidance: Bigtincan Holdings Limited (ASX: BTH) is a global leader in the rapidly growing sales enablement market. The company provides an online platform called ‘Bigtincan Hub’ which delivers the most related content to the users. BTH had communicated at the release of 1HFY19 results that FY19 guidance for revenue growth of 35-40% was on track. Later, in the month of April, the company revised its FY19 revenue guidance upward to be in excess of 40%.

Recent Development: The company recently informed that National Nominees Ltd ACF Australian Ethical Investment Limited has reduced its holding in the company, hence, the voting power has come down to 13% from 14.03%. BTH had announced a fully underwritten, 1 for 6 accelerated pro-rata non-renounceable entitlement offer of new fully paid ordinary shares in the company to raise ~A$15.6 million.

The company successfully raised ~A$12.4 million from the Institutional Entitlement Offer and ~$3.2 million from the Retail Entitlement Offer. Such proceeds will be used for – (1) expanding sales and marketing staff (primarily in the USA and the UK market), (2) technology and product development to drive continued innovation, (3) M&A opportunities, and (4) working capital and transaction.

BTH recently announced that FatStax (was acquired by BTH in November 2018) has exceeded the top tier of its earn-out performance target. FatStax achieved contracted annual recurring revenue in excess of 120% of target as at the end of the first 6-month calendar period after completion. As such, final payment of US$1.4 million will be made in early July 2019.

Highlights of March 2019 Quarterly Report & Appendix 4C: Cash receipts for the third quarter saw a growth of 19% to $5.4 million from 2QFY19 representing the largest cash collection quarter for BTH.
3Q FY19 operating cash outflows of $6.8 million was below than the 2QFY19 outflows of $7.5 million which had included integration costs for the acquisition made in 1HFY19. Cash outflow of $15.6 million for Entitlement Offer announced in April 2019 was also experienced in 3QFY19.

1H FY19 Results Highlights: ARR (Annual Recurring Revenue) for 1HFY19 was increased from $12.8 million to $20.9 million, posting a growth of 63%. The significant growth in ARR was primarily driven by growth in customer base and expanded technology options in the Sales Enablement market with both existing and new channel partners and direct sales teams. The company had posted net loss after tax for 1H FY19 of $1.95 million as compared to $3.17 million in 1H FY18. The company completed the acquisition of Zunos Technology Pty Ltd and FatStax LLC in 1H FY19. Customer retention has also improved to 87%, an increase of 2% as compared to June 2018.


 
Key Financial Metrics (Source: Company Reports)
 

 
Annualised Recurring Revenue (Source: Company Reports)
 
What To Expect Moving Forward: The management is of the view that BTH is on track to achieve its revised guidance for FY19. The company is well funded to achieve its current growth objectives supported by the market for sales enablement.

Stock Recommendation: The stock has generated hefty returns of 108.18% on a YTD basis and 55.44% in the last 3-months. The stock is trading towards its 52-week high. At the current market price of $0.550, market capitalization for the stock stands at $146.86 million.

The equity raising program, revised revenue guidance for FY19, acquisitions by the company, etc led the stock price to soar in the last few months.Going forward, we are of the view that most of the positives are factored in at the current price and we need to seek for new catalysts which can lead a new rally to the stock. Hence, considering the aforesaid facts, we suggest investors to book profits at the current level and recommend a “Sell” rating on the stock at the current market price of $0.550 per share (down 2.655% on 29 May 2019).


BTH Daily Chart (Source: Thomson Reuters) 

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