Whispir Limited

WSP Details

H1FY20 Results to be Released Soon:Whispir Limited (ASX: WSP) is a SaaS provider, offering development and provision of communication management systems through a cloud-based platform.

Performance Highlights of the Second Quarter FY20:The company recently released an announcement providing an update on the performance for the second quarter ended 31^st December 2019. Annualised recurring revenue for the quarter amounted to $36.7 million, up 6.4% from $34.5 million reported as at 30^th September 2019. Customer cash receipts for the quarter came in at $10.1 million, up 36.5% on the prior corresponding period, as a result of improved collection performance and increased platform usage. On account of strong operating and collections performance, cash and cash equivalents at the end of the quarter stood ahead of the prospectus forecast and came in at $19.1 million.

In order to sustain in the competitive environment, the company has been making continued investment in research & development, new capabilities, and development of new products, leading to capitalised development expenses of $1.2 million during the December quarter. In order to grow more in the product development landscape, the company also appointed Brad Dunn as the Chief Product Officer, to ensure more focus on increased platform functionality and capability. Brad possesses 20 years of relevant experience across the product development field and has delivered his expertise to renowned clients including Samsung, Airbnb and Aesop.

The company also notified that Appendix 4D and the financial results of H1FY20 are in the process of being reviewed by the auditors and are expected to be released on 18^th February 2020. Half-year EBITDA loss is expected to be in the range of $4.5 million - $5.0 million, materially ahead of the prospectus forecast of $6.4 million, primarily driven by the timing of operating expenditure in conjunction with a stronger than expected revenue in the first-half.

Cash Flow Highlights: During the quarter, cash used in operating activities amounted to $2.094 million, majorly comprising outflow in the form of staff costs of $5.664 million and product manufacturing and operating costs of $3.484 million.Cash outflow from investing and financing activities came in at $1.291 million and $0.158 million, respectively. In the subsequent quarter, the company has forecasted cash outflows amounting to $13.216 million.


Forecasted Cash Flows (Source: Company Reports)

A Glimpse of FY19 Results: During the year, the company reported a rise of 22% in ARR, in-line with the prospectus forecast. Revenue for the year amounted to $31.1 million, up 20% on pcp. Gross margin for the year stood ahead the prospectus forecast by 144 bps, at 63.2%. The year was marked by a strong revenue retention rate of 115.5% and growth across customer cohorts, supported by Gross dollar Churn of 6% and Gross Customer Churn of 11.3%. ANZ accounted for 79% of total group revenue and remains on track to hit $28.5 million in FY20. Growth in the region was driven by the increasing use of the platform by existing customers. In Asia, the company was focused on Singapore and Indonesia during FY19, which are set to hit $6.5 million in revenue in FY20. Moreover, the company is also planning to expand into the Philippines and Thailand.


Financial Results and Forecasts (Source: Company Reports)
 
Valuation Methodology:EV/Sales Multiple Approach
 

EV/Sales Based Valuation (Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The stock of the company generated returns of 4.29% over a period of 6 months and is currently trading slightly above the average of its 52-week trading range of $1.150 - $2.010. The company delivered a solid financial and operating performance in FY19, which continued into FY20 on YTD basis. We have valued the stock using EV/Sales based relative valuation method and arrived at a target price offering limited upside (in percentage terms). Considering the above factors and the awaited announcement for H1FY20 results, we have a watch stance on the stock at the current market price of $1.585, up 8.562% on 23^rd January 2020, pursuant to the announcement for December quarter results.
 
 
WSP Daily Technical Chart (Source: Thomson Reuters)

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