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);
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.
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.
Great update from BTH this week. https://www.asx.com.au/asxpdf/20200428/pdf/44h988v0fgzqgc.pdf
One downside is some capitalised software development.
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.
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.
Another strong update from BTH this week
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.
BTH revenue growth expectation 30-40% plus doing capital raise at 67c to add to strong cash position and poised for potential acquisitions
PC's Recommendation: Buy (High Risk), 12-month TP: $0.95.
BTH closed at $0.735 yesterday (Friday 22-May-2020).
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
Changes in Assumptions & Estimates
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 ---
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?
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.
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.]
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.