Bigtincan Holdings Limited

BTH Details

Highlights of FY21 & Q4FY21: Bigtincan Holdings Limited (ASX: BTH) provides an integrated, digital platform Bigtincan Hub, an intelligent, mobile, AI-driven sales enablement automation platform. 

• Rise in Cash Receipts, Q4FY21: BTH reported an increase in customer cash receipts to $14.7 million in Q4FY21, up by 40% YoY due to its enterprise-focused business model's robustness.
• Increase in ARR, FY21: The company reported an Annual Recurring Revenue (ARR) of $53.1 million, up by 48% YoY in FY21. This growth was due to organic growth in lead generation returning to pre-COVID-19 levels and new customer additions from the ClearSlide acquisition.
• New Offerings and Customer Wins: BTH announced the launch of Engagement Hub in April 2021 and secured new customers across multiple sectors and geographies including AirFrance, Fujitsu, Winnebago, Uber Eats, and many others in FY21.
• Business Integration: During Q4FY21, BTH finalised its Bigtincan product suite and ClearSlide (acquisition) integration with new features and transitioned into the Bigtincan Engagement Hub.

Total Operating Revenue & Net Loss Trend from FY18-FY20; (Analysis by Kalkine Group)

Key Risks:

• Technology Risk: BTH faces the risk of advancements/security/data failure in its technology platform to disrupt its current platform and quantum of investments.
• Dependence on Third-Party IT Suppliers: The company depends on multiple third-party suppliers to support Bigtincan Hub, its related hosting infrastructure and telecom facilities. Any service disruption or contract termination with any of the suppliers can adversely impact BTH’s financial performance.

Outlook: BTH estimates an audited revenue of more than $43.5 million for FY21 in line with the FY21 guidance of $43-44 million.

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 BTH gave a positive return of 40.24% in the past three months and a positive return of 4.54% in the past nine months. The stock is currently trading below the 52-weeks’ average price level band of $0.780 - $1.600. We have valued the stock using the Enterprise Value to Sales based illustrative relative valuation method and have arrived at a target price of high single-digit upside (in % terms). We believe that the company can trade at a slight premium than its peer median, considering the growth in cash receipts, ARR, new customers in FY21, and expected business integration benefits with ClearSlide. For this purpose, we have taken peers like Praemium Limited (ASX: PPS), LiveHire Limited (ASX: LVH), Damstra Holdings Limited (ASX: DTC) and others. Considering the current trading levels, positive operating cash flows, ARR growth, new customer wins, and valuation, we give a ‘Hold’ rating on the stock at the current market price of $1.150, down by ~0.863% as of 3 August 2021.

BTH Daily Technical Chart, Data Source: REFINITIV  

Integrated Research Limited

IRI Details

FY21 Business Update: Integrated Research Limited (ASX: IRI) designs, develops, implements, and distributes applications and systems management computer software for Unified communication networks, business-critical computing, and payment networks.

• New Sign-Ins: Multiple new agreements, contract renewals and unrealised forex gains in Q4FY21 (June 2021 quarter) contributed to a robust revenue and NPAT exceeding guidance.
• New Offering: IRI will launch new cloud-based products to grow recurring subscription revenues. The company released a new Webex solution in June 2021 and acquired new customers to offer new solutions inclusive of support for the Zoom and Microsoft Teams environments.
• Expansion Expected: IRI expects an expansion in the customer base in FY22 and will publish the earnings information for FY21 on 19 August 2021.
• Higher Net Cash: The net cash balance stood at $5.5 million as of 30 June 2021 versus $4.7 million as of 30 June 2020.

1HFY21 Financial Highlights:

• A Decline in Revenue: IRI reported a decline of 36% YoY in revenue to $34.11 million in 1HFY21. All the product lines were impacted globally, and the maximum revenue impact was due to the postponement of sales in 1HFY21.
• Fall in NPAT: The company recorded a fall in NPAT to $129,000, down by 99% YoY in 1HFY21.

Total Revenue & NPAT Trend from FY16-FY20; (Analysis by Kalkine Group)

Key Risks:

• COVID-19 Uncertainties: IRI felt the impact of COVID-19 and the revenue growth suffered due to lengthening of sales cycle, non-renewal sales opportunities, and shorter duration contracts signed by customers.
• Forex Fluctuations: The strengthened AUD over USD hurt the revenues in 1HFY21. The portfolio revaluation of foreign currency denominated assets and the conversion of offshore revenues at higher exchange rates decreased the reported revenues.

Outlook: IRI now expects the FY21 revenue to be near the top end of the guidance range of $74.1 - $79.1 million. The NPAT is now estimated to be slightly above the top end of the guidance range of $4.1 - $7.1 million reported previously.

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 IRI gave a negative return of 21.12% in the past three months and a negative return of 25.19% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level of $1.740 - $4.920. We have valued the stock using the Enterprise Value to Sales based illustrative relative valuation method and have arrived at a target price of low double-digit upside (in % terms). We believe that the company can trade at a slight premium than its peer median, considering it’s the new product launches and agreements, FY21 revised NPAT outlook, new customer additions. For this purpose, we have taken peers like Janison Education Group Ltd (ASX: JAN), ELMO Software Limited (ASX: ELO), Whispir Limited (ASX: WSP) and others. Considering the current trading levels, new contract wins and product launches, higher NPAT guidance for FY21, expansion expected in the customer base in FY22, valuation, and associated risks of COVID-19 and forex changes, we give a ‘Speculative Buy’ rating on the stock at the current market price of $1.885, as of 3 August 2021, 12.19 PM (GMT+10), Sydney, Eastern Australia.

IRI 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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