Consensus community valuation
$1.075
Average Intrinsic Value
24.8%
Undervalued by
Active Member Straws
#Acquisitions
Last edited a month ago

Looking at Bigtincan is like looking at all the acquisitons they have done. This is quite a mouthful, but bear with me (these are all the acquisitions they have done soo far); 

  1. Contondo - After listing, the acquired Contodo on 27 November 2017. The amount, I actually cannot find it in their presentation decks. Did they get them for free? There were mentions on it, but I have no clue how much they paid for it. It's an Israeli company that integrated into Bigtincan's data science team. The Contondo platform have pulgins with Salesforce and Microsoft Dynamics. The acquisition is strategic in nature to build the data science team. 
  2. Zunos - Occured 31 July 2018, where Bigtincan paid $3.25M in all cash. Bigtincan gains expanded presence in the West Coast and Midwest regions in the USA and adds additional Channel Partners including Telstra in Australia. At this time there were 12 fortune 100 customers. There is a cap of a $11M to be paid based on recurring revenue earned from the Zunos platform in FY19 and FY20. Hence another $7.75M to be paid. I think this part of the reason why they did the SPP recently ($7M raised to cover working capital costs to support recent wins and transactions).  
  3. Fatstax - Occured 22 November 2018, where Bigtincan paid $1.8M in all cash. They also gave a $1.4M performance fee if milestones were hit, payable in Q1FY20. Bigtincan paid $1.4M in performance as FatStax has achieved contracted annual recurring revenue in excess of 120% of target. Hence $3.2M paid for the acquisition. 
  4. Veelo - Occured 25th July 2019, paid $1.8M in cash and brings ARR ~1.1M from USA. The transaction complements Bigtincan’s existing North American footprint with teams centred in Portland, Oregon with remote team members in Minneapolis, and throughout the USA and Mexico. 
  5. Asdeq Labs - Occured 4th September 2019, paid $0.49M brought ARR ~ $0.40M. This acquisition is strategic for product development. Their product AsdeqForms ensures secure and automatic delivery of documents and data collection on field employees’ devices. 
  6. Xinnovation - Occured 30th September 2019, paid $4.5M. They have 15 customers that bring ARR ~ $3M. XINN is a sales enablement and document automation platform that serve financial services customers. 8 of the top 15 investment managers in the world use this soo high retention rate.  

They recently raised $35M of which $17.5M is for future acquisitions. From just looking at acquisitions, it seems to me that when Bigtincan finds a threat, they quickly acquire the company. Some of the acquisitions I like, such as Zunos and Fatstax. This is due to enabling Bigtincan to acquire more market share through Fortune 100 customers. However, the others does not make sense to me. Buying Asdeq to enhance product development, surely they can use $400k to build it internally, thus saving cost. Contondo, don't know what happened there, no mention of them in recent reports. Veelo I feel is too small, if those guys bring $1M in ARR how does Bigtincan grow sales in Portland? Maybe, there is the case that the combined brand could snatch new customers in that region. Xinnovation is interesting as it targets financial service industry but would those customers like the sales enablement platform of Bigtincan? They like XINN's document automation. 

Probably need to do more research on where the big US companies subside to see if Bigtincan's salesforce can reach more enterprise customers. 

In total, Bigtincan has spent around $11.8M in acquisitions. The recent 3 acquisitons (Veelo, Asdeq and Xinnovation) cost around $6.2M. In the recent 1HFY20 filing those 3 made up $1.6M (11.6%) of total revenues.    

The volume of acquisitions does my head in, but ARR have grown. So there is a case to be made regarding revenue synergies, not sure about cost synergies. However, I fear that there could be a J Capital type of report in the corner. Shareholders have shown a lot of loyalty to the company with recent SPP being heavily over subscribed. Plus, I have added them into my strawman portfolio.     

 

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#Bull Case
Added 5 months ago

Spewing that I missed this weeks drop to 26.5c. It's now back to my original purchase price of 40c after reaching $1 and then being crunched. Perhaps in response the board put out the following announcement to reaffirm guidance. https://www.asx.com.au/asxpdf/20200320/pdf/44g77jpgtms43y.pdf. I didn't have time to re-evaluate during the week, waiting for the weekend, and hence lost my chance.

The board re-affirmed guidance for the year of 30-40% organic growth. That's very impressive and they back it up to say that they already work remotely, have global workforce and sales, diverse customer base, fortune 100 customers, no single customer > 10% revenue, but I am a little skeptical. Their points relate to a high level of retaining existing revenue, but I wonder how much new custom they will get. Maybe they have already achieved that goal since we are in March and EOY is only 3 months away.

They have $10M in cash, burnt $4M last half yr. Interesting they only spent $3M on general admin whilst spending $8M on sales and marketing and $6M on product development. So they have enough cash for a year and then can easily scale back sales & marketing and product development to reign things in.

So they have enough to ride out the downturn and have the product that organisations will want to generate sales in the future. I'm still positive. Market cap to ARR is now 4.

 

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#ASX Announcements
Added 3 months ago

Great update from BTH this week. https://www.asx.com.au/asxpdf/20200428/pdf/44h988v0fgzqgc.pdf

  • Bigtincan had $31.5m in cash and cash equivalents at the end of the March Quarter. Cash flow positive +$5M for the qtr and now +$1.6M for 9 months. This seems like a strong inflexion point in profitability
  • New wins with Fortune 500 companies delivered in the quarter, including DXC.
  • Bigtincan reaffirmed guidance for FY20, and remains on track to deliver 30-40% organic revenue growth,with stable retention in FY20
  • Customer cash receipts for the Quarter were $14.9m, an increase of 178% over the previous corresponding periodand a 65% increase over the previous December 2019 quarter of $9m.

One downside is some capitalised software development.

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#Financials
Added 5 months ago

Good results from BTH. https://www.asx.com.au/asxpdf/20200227/pdf/44fj0xs7z5n0c1.pdf

Figures below are 1H20 in comparison to 1H19

ARR $32.4m Up 55%

Retention 89%  Up 2%

LTV$ 252m Up 84%

Subscription revenue $13.6m  Up 59%

2/3 of the growth was organic. 1/3 acquaried.

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#Bull Case
Added a month ago

SPP at 67c complete now and was oversubscribed, showing great demand and potential. BTH can only benefit from the current environment due to their technology/platform and should look to go northwards again towards $1. 

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#ASX Announcements
Added 7 days ago

Another strong update from BTH this week

  • Customer cash receipts increased 89% to $10.4m, from the June 2019 Quarter of $5.5m.
  • Cash operating payments increased 74% to $12.3m, against $7.1m for the previous corresponding quarter.
  • Annualised Recurring Revenue (ARR) year on year growth of 53% to $35.8m, with organic ARR growth of 40% to $32.7m. 5-year ARR CAGR of 50%.
  • Cash and cash equivalents of $71.9m at the end of the June Quarter.

Cash operating payments were up from previous qtr of $11.1m. This is conistent with their stated yearly 40% organic growth .

They break even from a cash-flow basis so I am not sure why they raised cash to now have $72m in the bank. Their market cap is $350m - so they hold 20% of their market cap in cash!

One downside is that they did capitalise some development work.

For the next qtr I'll be watching for whether their costs remain stable and growth starts to go straight to the bottom line.

https://www.asx.com.au/asxpdf/20200728/pdf/44kwpzlp93ttgv.pdf

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#Bull Case
Added 2 months ago

BTH revenue growth expectation 30-40% plus doing capital raise at 67c to add to strong cash position and poised for potential acquisitions 

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#Broker/Analyst Views
Last edited 2 months ago

22-May-2020:  Phillip Capital:  Bigtincan Holdings (BTH) Placement and SPP - $70m War chest - Strong business drivers

PC's Recommendation:  Buy (High Risk), 12-month TP: $0.95.

BTH closed at $0.735 yesterday (Friday 22-May-2020).

Excerpts:

Summary
Bigtincan Holdings Limited (BTH) was founded in Sydney in 2011 and has become a recognised global leader with its “Bigtincan Hub” sales enablement software. The platform uses machine learning and artificial intelligence (AI) to provide sales collateral, training and coaching to sales and customer service reps in the field to increase their selling effectiveness. It enables reps to securely access all types of content (files, documents, PDFs, PowerPoint presentations, e-mail, video etc.) from a single data source and to automate work processes and documentation across any mobile device or fixed network.

BTH has ~15 offices across the USA, Europe & Middle East, Australia and Asia with its global sales and marketing headquarters in Boston, and corporate head office in Sydney. It has long-standing strategic alliances with Apple, Salesforce.com, AT&T and a total of 28 partners / resellers. BTH has over 200,000 users across 400+ deployments in over 52 countries and 17 languages. Recent new customer wins include DXC Technology, Sephora, Anheuser Busch and Nike.

Placement and SPP at 67 cents

  • $40.0m capital raising announced ($35.0m placement and $5.0m SPP) at $0.67 per share, an 11.8% discount to the previous close of $0.76. SPP $5,000 max per holder.
  • With existing net cash of $31.5m at 31 March, cash reserves will increase to ~A$70.0m. Quite a tidy war chest.
  • Purpose of placement: M&A opportunities $17.5m; Accelerate organic growth $10.5m; Working capital to support recent contract wins and transaction costs $7m.

Changes in Assumptions & Estimates

  • We assume that $17.5m of the available cash is deployed for the whole of FY21 on acquisitions, with $7.3m of incremental sales (2.4x historical acquisition multiple). We assume a 0% Ebitda margin in year 1 and 10% in year 2 once integrated.
  • Shares on issue up 19% to 369m.
  • EPS changes: FY20 -1%; FY21 -20% (dilution); FY22 +10% (acquisitions become profitable).
  • Composite valuation: $0.95 (was $0.83) +14%.
  • We raise our 12-mth price target to $0.95 (was $0.83) which implies a 31% 12-mth total shareholder return (TSR).
  • We will revise our acquisition(s) allowance as actual deals are announced.

Recommendation – Reiterate Buy

We now forecast revenue growth of 75% (40% organic) for FY20 (no change), 53% for FY21 (30% organic) and 25% for FY22 (all organic).

Our DCF valuation is $0.82 (was $0.74). Our Salesforce.com Comps valuation is $1.08 (was $0.92). Our 12-mth blended price target increases is $0.95 (was $0.83).

BTH is enjoying powerful tailwinds in its business, driven by the switch to Cloud, mobile working and SaaS whilst users and customers are demanding better information faster. BTH is a standout growth stock. We reiterate our BUY recommendation.

--- click on link above for more ---

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#Alexa
Added 2 weeks ago

Their Alexa rank seems to be up strongly to a 1 year high.  So if this is suggestive of inveasing website visits lately, can anybody confirm if this should lead to higher revenue?

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#Broker/Analyst Views
Added 4 months ago

20-Mar-2020:  Phillip Capital:  Bigtincan Holdings (BTH):  Buy:  US$ Earner, Strong business drivers, Guidance re-confirmed

PC now rate BTH as a "BUY" with a "High" Risk Rating and they have a 12-month PT (price target) of $0.68 for BTH (was $0.85), which should close today (27-Mar-2020) at 42 to 43c/share, suggesting there is over +50% upside from here if PC are correct.

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#Broker/Analyst Views
Added 3 months ago

29-Apr-2020:  Phillip Capital:  Bigtincan Holdings (BTH):  Buy:  Q3 Report:  Record Qtr - US$ earner - Strong business drivers, Guidance affirmed

PC still rate BTH as a "BUY" with a "High" Risk Rating and they now have a 12-month PT of $0.83 for BTH (up from 68 cps), which closed today (01-May-2020) at 74.5c/share, suggesting there is some (but not much) upside from here if PC are correct.  BTH have had a remarkable recovery from 27 cps on March 19th to now be almost triple that at 74.5c.  Looks like PC (Phillip Capital) are playing catch-up again.   [Disc: I don't hold BTH.]

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#Broker/Analyst Views
Added 6 months ago

30'Jan-2020:  Phillip Capital:  Bigtincan Holdings (BTH):  Hold:  Sales Enablement Software Leader - Big Quarter

PC rate BTH as a "Hold" with a "High" Risk Rating and they have a 12-month PT (price target) of $0.85 for BTH, which closed at $0.99 on Friday (Jan 31), suggesting BTH's SP may have gotten ahead of itself - or that PC (Phillip Capital) are wrong.

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