Robust 1HFY18 Performance: Dropsuite Ltd (ASX: DSE) has posted stellar results for 1H FY18 with revenue up 70% at $1.91 million. It was largely driven by the company’s proprietary cloud-business email back-up solution services for SMBs during the same period. Dropsuite has also narrowed its EBITDA loss to $770,000 on the back of its conservative cost base policy. Revenue base for the company has expanded in the first half of the current financial year and cash position stands strong at $4.03 million as of 30 June 2018.

Dropsuite reported strong Paid User growth exceeding 600,000 during the first half ended on 30th July 2018. The major factor contributing to the Paid user growth is new Reseller Partnership that the company entered into in April 2018. Further, Reseller partner number inched to 140 globally in the first half of the financial year. The company has entered into some significant partnerships during the reported period. Few important ones include South Africa based IT and Cloud distributor, Tarsus, UOL from Brazil, Squalio – a major cloud service provider in the Eastern Europe and Vietnam’s leading hosting provider Mat Bao.


Growth in Paid Users (Source: Company Reports)

Partnership to drive growth: Major factors fueling the growth in the company are sales pipeline conversion, presence in the new geographies and new partnerships. Dropsuite is looking to capitalize on the prevalent challenges in the Technology space. The company is looking to provide a cost-effective solution which is not devoid of the necessary features but also affordable for the small and medium enterprises. Moreover, the partnership with Tarsus is the first venture of the company in South Africa, where the company has been roped in to provide scalable and secure office 365 cloud backup services to the South African Business. Projections such as African e-commerce in South Africa growing to approximately 25 million would work in favor of Dropsuite who has already made an early entry in the in the region. As of now, the group is primarily focused on tapping the business in the developed and fast developing economies since it leads to higher Average User per unit.

Stock Performance: The stock has generated impressive YTD returns of 110.53%. The stock is in a secular uptrend and we expect the momentum would continue in the months to come. Major indicators are signaling positive momentum in the stock and no sign of divergence. We maintain "Hold" rating on the stock at the current market price of $0.135 (up 12% on August 30, 2018 after falling over 7.7% in past five days).