ASX:AND (Ansarada) is playing in the M&A software space. founded around 15 years ago but going through an interesting transformation now:
A. the company recently raised $45m to facilitate the acquisition of Thedocyard, eliminate debt, and fund future growth - the acquisition makes a lot of sense and the two businesses are very complimentary (Ansarada bringing their 'virtual data room' while Thedocyard bringing end-to-end 'deal/transaction management'.
B. Following the acquisition, Ansarada became a public company around 4 months ago.
FY20 Revenue = $34m
FY21 Revenue growth: 17% QoQ est (source, page25 )
Market Cap = $110m AUD
No debt, ~ $30m cash in hand
==> Trading at ~ 3x EV/Revenue (and ~2.5 EV/future_rev)
Gross margin = 90% (source)
Bull-case: post covid-19 M&A transactions volume recovers to previous levels. The company delivers on its post-acquisition plan and executes well on its transition to SaaS charging model --> Delivering FY25 Revenue of $130-150m AUD which at x8-10 EV/Rev multiple resulting in EV of $1b - $1.5b AUD (x10 return).
Key risks I see:
- integrating the two businesses (Thedocyard being the much smaller fish) and operating as a public-company (remaining focused on execution will be tested here)
- transitioning from legacy to SaaS monetization model - impacting revenue growth (see page 22 here)
First post- be kind
A recently merged company between Ansarada and Thedocyard, and they raised $45m at $1.48 in December to fund growth and facilitate the merger (it was really a takeover). Thedocyard was a $25m listed company specializing in software to facilitate deals. Ansarada provides virtual data rooms for businesses, and it had been looking to IPO prior to Covid.
They develop technology to solve the problems and frustrations caused by legacy tools, processes, and ways of thinking in advisory firms and corporate customers. This is achieved through a simple, intuitive data room software to seamlessly help advisors and companies succeed in deals. They also have a platform for information governance and advisor workflow management. The reason for the merger is that they believe there are a lot of synergies between the products that can be optimized to solve more information governance issues and will lead to their software becoming embedded (and thus essential) in organisations.
Market Cap = $107m (81m shares on issue at $1.39)
FY20 Revenue = $34m
Trading at less than 3x EV/Revenue
Gross margin = 90% (????)
New merger/entity, and not guaranteed they will synergise
Not sure yet if they are a “must-have” product
Revenue has been decreasing the past couple years (FY18 = $38.9m, FY19 = 37.1m)…
The revenue issue is a big red flag; however, in 2018 they began the process of transitioning from legacy one-off payments for their software to a SaaS model. We’ve seen similar revenue stagnation occur in other companies when making this transition, so I’m hoping it’s a similar story. Note that they are also allocating 35% of revenue to sales & marketing and 28.5% to product design and development.
I want to do more research into the company, especially with regards to their products (and how essential they are) and a background into management. I’ll add that once completed, but in the meantime I just wanted to get these guys on the radar. I've taken a 1% position in the company, which I feel is right for the time being, as I look to follow the company's story and dive deeper into them. However, my initial thoughts are that if they are successful in transitioning to a SaaS tech company, they will hopefully get a rerate. Based on other ASX companies, I think that a conservative estimate would be 5xEV/ARR, and thus I get a value of $2.32
First straw, please be nice :)