Bigtincan Holdings Limited

BTH Details

A Look at Financial Performance of Q2FY21: Bigtincan Holdings Limited (ASX: BTH) provides an integrated, digital platform Bigtincan Hub, an intelligent, mobile, AI driven sales enablement automation platform. As on 11^th February 2021, the market capitalisation of the company stood at ~$458.18 million. Recently, the company released its Q2FY21 quarterly update. It announced achieving track record of growth attaining ARR of $48.4 million as on 31 December 2020, up by 50% on pcp basis. The company has progressed well on its “Land and Expand” strategy, and recorded growth of 21% in total active customers using the Bigtincan platform versus 16% in 1H20. 

For December 2020 quarter, BTH earned cash receipts of $10.5 million, up by 32% over pcp (exclusive of multi-year payments) against the firm’s forecasts. It incurred $1.1 million of operating cash loss in Q2FY21, down by 14% on pcp basis. BTH held a total of $33.4 million cash and cash equivalents as on 31 December 2020. During the quarter, BTH completed acquisitions of Agnitio and ClearSlide. Also, the company conducted first Product and Technology Investor Briefing webinar event. It intends to continue these activities during 2H21 and provide online recording of the events.

Growth of ARR ($m), Quarterly Highlights (Source: Company Reports)

Outlook: BTH forecasts ARR to be at the top end of $49-$53 million, guidance for FY21. It assumes a stable exchange rate, and stable customer retention for the aforesaid forecast.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Data Source: Refinitiv, Thomson Reuters, 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 negative return of 9.54% in the past three months and a positive return of 28.23% in the past six months. The stock is currently trading towards its 52 weeks’ high level of $1.6. The stock of BTH has a support level of ~$1.025 and a resistance level of ~$1.158. We have valued the stock using an Enterprise Value to Sales multiple 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 as compared to its peer average, considering decent results in Q2FY21, expanded portfolio, acquisition synergies and increase in total active customers using the Bigtincan platform. For the purpose, we have taken peers like Praemium Limited (ASX: PPS), Whispir Limited (ASX: WSP), Damstra Holdings Limited (ASX: DTC) to name a few. Considering the current trading levels, decent results of Q2FY21, achieved ARR growth for 1H21, and valuation, we give a ‘Hold’ rating on the stock at the current market price of $1.090, down by ~1.802% on 11^th February 2021.

BTH Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Cirralto Limited

CRO Details

Declaration of December 2020 Quarter Results: Cirralto Limited (ASX: CRO) is engaged in transaction services business offering B2B payment services, integrated solutions, and digital trading software to industries. As on 11^th February 2021, the market capitalisation of the company stood at ~$116.26 million. The company reported increase in revenue by 84% to $329k and its ARPU grew by 35.05% to $45.11 for Q2FY21. During the quarter, the company achieved key milestones such as launch of SpendaCollect V2 and signed business payments agreements with Fiserv, Visa and Mastercard companies. During December 2020, CRO signed key business payments contracts with Fiserv, Visa and Mastercard companies. CRO raised capital to the tune of ~$2.8 million during the quarter. The company registered growth in cash receipts by 54% to $236k for December 2020 quarter.

ARPU Growth, March 2020-December 2020 (Source: Company Reports)

Outlook: The company has planned to launch MySpenda (payment services) and complete the acquisition of Appstablishment in Q3FY21. CRO estimates that the proposed acquisition will generate over ~$1.9 million in R&D grants in FY21, ~$500,000 in yearly sales, and a decrease in overheads and various synergies of the bigger group.

Stock Recommendation: CRO held a cash balance of ~$3.95 million as on 31 December 2020. The stock of CRO gave a positive return of 88.57% in the past three months and a positive return of 441.94% in the past six months. The stock is currently trading towards its 52 weeks’ high level of $0.080. The stock of CRO has a support level of ~$0.063 and a resistance level of ~$0.07. Considering the current trading levels, and significant returns in the past 3 months and 6 months, we are of the view that most of the key positives of the stock have been factored at current juncture. Hence, we suggest investors to wait for better entry levels and give an ‘Expensive’ rating on the stock at the current market price of $0.066, down by 2.942% on 11^th February 2021.

CRO Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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