Appian Corporation

APPN Details

Appian Corporation (NASDAQ: APPN) operates a low-code software development and automation platform in the U.S. and internationally. The company assists organizations in building apps, maximizing resources, and improving business results by combining personnel, technology, and data in one workflow.

Business Expansion in APAC: On July 26, 2021, the company launched its regional office in Japan, which will expand APPN’s brand presence in Japan. Appian Japan is currently partnering with global companies such as Wipro Limited, focusing on delivering solutions for mitigating End-User Computing (EUC) risks for financial institutions. Its collaboration with Ridgelinez Co., Ltd. aims to increase process visualization and intelligent automation in the finance and accounting realms for Japanese organizations.

Accelerating Time-to-Payment using Appian RTA: On May 12, 2021, APPN announced that Entelgy, a business and technology consultancy, launched its first-ever application on APPN’s platform. The company stated that the platform helped Entelgy reduce the time between invoicing and payment by 35%, and also reduced the chance of errors in invoice validation. With the platform’s Robotic Process Automation (RPA), 98% of Entelgy’s invoices can be processed without human intervention.

Q1FY21 Results: During Q1FY21 (ended March 31, 2021), the company’s total revenue increased 12.67% to USD 88.86 million vs. USD 78.86 million in Q1FY20. Total subscriptions revenue increased 26.43% YoY to USD 63.77 million for Q1FY21, primarily due to a 37.56% increase in cloud subscriptions revenue. However, Net loss for Q1FY21 was USD 13.59 million, higher than USD 11.67 million reported in Q1FY20, owing to a 19.68% increase in operating expenses.

Key Risks: APPN currently generates most of its subscription revenue from the sales of its software platform, and is also the source of almost all of its professional services revenue. Any decline in growth or performance failure could render the company’s platform less lucrative and hence, significantly affect its operations. In addition, APPN generated 18.1% and 17.1% of its total revenue from U.S. federal government agencies during FY20 and FY19, respectively, with the three largest U.S. federal agencies accounting for 6.6% and 7.4% of the total revenue for these years. Losing even one such customer could severely impact the company’s business and financial condition.

Outlook: For Q2FY21, total revenue is estimated to range between USD 77.0 - 78.0 million, representing a 15% - 17% YoY growth. Non-GAAP net loss per share is expected to be in the range of USD 0.26 and USD 0.23. For FY21, APPN expects its total revenue to range between USD 353.0 - 355.0 million (up 16% - 17% YoY), with non-GAAP net loss per share ranging between USD 0.68 and USD 0.65.

Valuation Methodology: EV/Sales Value Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

APPN Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: APPN stock surged 86.40% in the past nine months and is currently leaning towards the lower-band of the 52-week range of USD 48.02 to USD 260.0. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is 47.18. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 102.28. Considering the uptick in the stock price, fundamentals of the business, lack of visibility into profitability, and current valuation, we recommend an “Avoid” rating on the stock at the current price of USD 120.86, up 5.21% as of July 28, 2021, at 12:43 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

Naked Brand Group Limited

NAKD Details

Naked Brand Group Limited (NASDAQ: NAKD) is a global company that designs, manufactures, and markets intimate clothing and swimwear. NAKD now (after divesting Bendon) predominantly generates revenues through its e-commerce business from across New Zealand, Australia, the United States, and Europe. Fredericks of Hollywood, Pleasure State, Davenport, Lovable, Bendon, Fayreform, Naked, VaVoom, Evollove, and Hickory are among the NAKD authorized and owned brands. Through its online site, www.fredericks.com, NAKD is the official supplier of renowned intimate clothing brand Fredericks of Hollywood (FOH).

Notice of Non-Compliance with the Minimum Bid Price: On April 29, 2021, The Nasdaq Capital Market (NASDAQ) informed the apparel manufacturer that its common shares' minimum bid price had been below USD 1 per share for 30 consecutive business days and, thus, it failed to meet the Nasdaq Listing Rule's minimum bid price requirement. To restore compliance with the minimum bid price criterion, NAKD has 180 calendar days (until October 25, 2021). If the Nasdaq team determines that the firm will not be able to meet the requirement or is otherwise ineligible, it may delist the company's common shares.

Closure of Bendon Divestiture: After gaining shareholder approval at its special meeting on April 23, 2021, NAKD announced the sale of its Bendon brick-and-mortar business on April 30, 2021, to JADR Holdings Pty Limited. After the transaction, NAKD will now be able to use its resources to create value from the FOH online business, as well as strategic acquisitions in the e-commerce space rather than supporting Bendon’s losses to keep it functioning.

FY21 Results: The company reported an 11.13% decline in revenues to NZD 80.04 million in FY21 (ended January 31, 2021) compared to NZD 90.06 million in FY20, primarily due to temporary store closures and disruption in the supply chain. In addition, the company reported an increase in net losses to NZD 68.35 million in FY21 vs. NZD 54.30 million in FY20. As of January 31, 2021, the company had cash and cash equivalents of NZD 90.92 million with a total debt of NZD 39.05 million.

Key Risks: NAKD has a long history of operational losses, which are expected to persist in the near future. Any additional capital infusion required to support expansion plans might result in further dilution of common shareholders. Moreover, during the fourth quarter holiday season, the company's net revenues undergo significant seasonal fluctuations. Any reduction in inventory levels during this time period might have a significant negative impact on the company's financial position and cash flows.

NAKD Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: NAKD’s share price nosedived 60.74% over the past six months and is currently trading in the lower band of the 52-week range of USD 0.07 to USD 3.40. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 42.85. Considering the company’s uncertain outlook, continuous increase in losses, failure to comply with NASDAQ’s listing rules, and other associated risks, we recommend an "Avoid" rating on the stock at the current price of USD 0.5417, up by 4.19% as of July 28, 2021, at 02:53 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

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