08-Feb-2021:  Sequoia Financial Group: Bigtincan Holdings Limited (BTH): ClearSlide acquisition doubles BTH customer base and TAM

Analyst:  Wayne Sanderson – Head of Research, wayne.sanderson@sequoia.com.au, +61 400 434 548

• Recommendation: Accumulate (from Buy)
• Risk Rating: High
• 12-mth Target Price (AUD): $1.32 (was $1.38)
• Share Price (AUD): $1.15 ($1.07 on 12-Feb-2021)
• 12-mth Price Range: $0.26 - $1.60
• Forecast 12-mth Capital Growth: 14.8%
• Forecast 12-mth Dividend Yield: 0.0%
• 12-mth Total Shareholder Return: 14.8%
• Market cap ($m): 473.8
• Net debt/(net cash) ($m)(Jun 21e): (54.9) (net cash)
• Enterprise Value ($m): 418.9
• Gearing (Net Debt/ Equity): N/a – Net Cash
• Shares on Issue (m): 412.0
• Options / Perf rights on Issue (m): 10.7
• Sector: Software
• Average Daily Value Traded ($): $2,377,000
• ASX 300 Weight: n/a

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 ~16 offices across the USA, Europe & Middle East, Australia and Asia with its global sales and marketing headquarters in Boston, and corporate administration in Sydney.

It has long-standing strategic alliances with Apple, Salesforce.com, AT&T and a total of 29 partners / resellers.

BTH has >300,000 users across >400 deployments in over 52 countries and 35 languages. Recent new customer wins include DXC Technology, Sephora, Anheuser Busch and Nike.

Two acquisitions and a $35m placement at $1.05/shr

On 23/12/20 BTH announced the acquisition of ClearSlide, a similar but complementary sales enablement software business for US$16.25m cash (A$22.6m). This was BTH’s largest acquisition to date. With > 500 enterprise customers, ClearSlide doubles BTH’s customer base and provides strong opportunities for cross-selling / upselling each firm’s products. It also removes a potential competitor and increases BTH’s TAM (Total addressable market) to US$6.0 billion. Acquisition multiple reasonable at ~3.1x ARR of A$7.2m (or 3.8x including further $5.0m planned investment).

On 15/1/21 BTH announced the acquisition of VoiceVibes for US$2.0m (A$2.6m), an AI-powered sales coaching app which can review the quality of Sales staff’s phone calls across ~20 metrics (vibes) with ~90% accuracy. BTH should be able to cross-sell this effectively to its existing customer base.

Placement and initial losses in acquisitions are dilutive shortterm, but BTH is building a strong leadership position in a large under-penetrated e-commerce growth market.

ARR (Annualised Recurring Revenue) now $48.4m at end December including ClearSlide (v $32.4m) +49% on pcp.

Forecasts and Recommendation

Our revenue forecasts increase by 0.1%, 5.7% and 5.9% for FY21e, FY22e and FY23e, (also including lower US$ forecasts). However we also increase estimated costs resulting in a downgrade to Ebitda of -$1.1m, -$2.6m, and - $3.5m.

Our revised valuation range is $0.78 (DCF) to $1.77 (US SaaS peer group revenue multiples, discounted heavily) with a Composite Valuation of $1.32 (was $1.38) per share. This implies 14.3% upside from the current price.

Recommendation: Accumulate (was Buy) on this exciting emerging global SaaS company. With strong tailwinds post Covid, $65m of net cash, and strong product innovations coming, we think that BTH has never been in better shape.

What has changed?

1. On 23 December 2020 BTH announced the acquisition of ClearSlide Inc, a similar, but complementary Sales Engagement software platform company based in San Francisco, for US$16.25 (A$22.6m) in cash. Acquisition revenue multiple stated to be 3.1x US$5.5m estimated sustainable ARR (annual recurring revenue)(AUD equivalent $7.1m ARR). In addition BTH estimates a further A$5.0m of integration costs will be invested in the business, making a total acquisition cost / investment by BTH of A$27.6m (3.8x ARR).
2. The acquisition was funded by an A$35.0m institutional placement at $1.05 per share, despite BTH having $67m of cash at end September. 33.333m new shares issued on 6 January 2021 (8.8% increase in shares on issue).
3. Revenue guidance was unchanged from the August result at A$41-44m (v A$31.0m in FY20) despite the acquisition of ClearSlide and also Agnitio announced 14 October. If ClearSlide’s 6 month revenue contribution for FY21 is A$3.5m and Agnitio’s 8.5 month revenue contribution is ~A$1.6m, this implies a revenue downgrade of around $5.1m (-12% on the guidance mid-point). We estimate this is entirely due to the currency headwind as the AUD has strengthened from US$0.69 at 30/6/20 to US$0.76 now, +10%.
4. On 15/1/21 BTH announced the acquisition of VoiceVibes, a Baltimore Maryland based company and leader in voice analytics, for US$2.0m (A$2.6m). This comprises US$1.26m cash, US$100k deferred for 12-months subject to set-off against warranty claims, and US$0.6m in BTH shares (750,220 shares at $1.098). Revenue in FY21 is not expected to be material. We review this in more detail on following pages.
5. December quarterly report & Appendix 4C cash flow report. Mixed. We review this in detail on pages 6-7.
6. We revise our 12-month price target to $1.32 per share (previously $1.38), -4% due to dilution from the placement, adverse FX and higher cost assumptions. Our price target implies 14.8% upside from the current $1.15 share price. Accordingly our Recommendation is now Accumulate (from Buy). 

--- click on the link at the top for the full Sequoia report on BTH ---

17-Dec-2020:  Sequoia Financial Group: Bigtincan Holdings Limited (BTH): Upgrading our price target – Outlook extremely strong

Analyst:  Wayne Sanderson – Head of Research, wayne.sanderson@sequoia.com.au, +61 400 434 548

• Recommendation: Buy (High Risk)
• Risk Rating: High
• 12-mth Target Price (AUD): $1.38 (was $0.95)
• Share Price (AUD): $1.10 ($1.13 on 18-Dec-2020)
• 12-mth Price Range: $0.26 - $1.60
• Forecast 12-mth Capital Growth: 25.5%
• Forecast 12-mth Dividend Yield: 0.0%
• 12-mth Total Shareholder Return: 25.5%
• Market cap ($m): 416.6
• Net debt (net cash) ($m)(Jun 20): (69.3) i.e. net cash
• Enterprise Value ($m): 347.3
• Gearing (Net Debt/ Equity): N/A (no net debt - net cash)
• Shares on Issue (m): 378.7
• Options / Perf rights on Issue (m): 10.7
• Sector: Software
• Average Daily Value Traded ($): $2,242,000
• ASX 300 Weight: n/a

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 ~16 offices across the USA, Europe & Middle East, Australia and Asia with its global sales and marketing headquarters in Boston, and corporate administration in Sydney.

It has long-standing strategic alliances with Apple, Salesforce.com, AT&T and a total of 29 partners / resellers.

BTH has >300,000 users across >400 deployments in over 52 countries and 35 languages. Recent new customer wins include DXC Technology, Sephora, Anheuser Busch and Nike.

AGM reaffirms revenue guidance

BTH reaffirmed guidance given with the FY20 result for revenue of A$41-44m for FY21. We estimate this implies organic revenue growth of 29% to 38%.

This is even more impressive when one considers the A$ has recently appreciated to $0.75 from the FY20 average of $0.671 (+ 12% against the US$), devaluing BTH’s largely US derived revenues.

FY20 Result

• FY20 Revenue $31.0m +56% (35% organic + 16% from acquisitions). This was a strong result, but was 11% below our forecast.
• FY20 Ebitda was a loss of ($7.9m) v ($3.3m pcp). This included $1.3m losses from the 3 acquisitions in the year. This was $5.2m worse than our forecast loss of $2.7m.
• Operating cash flow was positive for the first time at $1.8m (v $6.6m burn pcp). It was boosted by a $10.8m working capital benefit – customers paying 12 months in advance.
• Closing net cash $69.3m (v $25.1m) includes $19.6m (v $9.6m) unearned revenue received in advance.
• Annualised Group Revenue +53% ($35.8m v $23.4m pcp).

Forecasts and Recommendation

We have revised our revenue forecasts down by 23%, 21% and 21% for FY21e, FY22e and FY23e. This downgrade includes an estimated 12-15% adverse currency impact. 

We have changed our methodology for our Composite valuation. Our valuation range is $0.97 (DCF) to $1.69 (US SaaS peer group revenue multiples, discounted heavily) with a Weighted Composite valuation of $1.38 per share. This implies 25% upside from the current price.

We maintain our Buy recommendation on this exciting emerging global SaaS company. With strong tailwinds post Covid, we think that BTH has never been in better shape.

What has changed?

1. Changes in Estimates - We lower our estimates for lower than expected FY20 results, FX impact on US-derived revenues, and also incorporate the recent Agnitio acquisition.
2. Acquisition of Danish software company Agnitio A/S for up to A$4.95m (A$3.3m plus conditional deferred cash consideration of up to $1.65m). Estimated ARR A$1.6m.
3. AGM update on 25/11/20. Revenue guidance reaffirmed for $41-44m for FY21 (v $31.0m) implying 29-38% organic growth (midpoint 33.5%).
4. September quarter report and Appendix 4C cash flow report – Cash receipts a bit soft solely due to seasonality and timing of receipts.
5. FY20 Results review – Strong result, but revenue 11% below our forecasts.

--- click on the link at the top for the full Sequoia report on BTH ---

11-Sep-2020:  LivewireMarkets.Com: Buy Hold Sell: "5 small caps chasing big markets"

In this episode, filmed on 09-Aug-20 and posted on Livewiremarkets.com on 11-Sep-2020, Chris Stott of 1851 Capital and Gary Rollo from Montgomery Investment Management debate three small caps ripe for this thematic ("small caps chasing big markets").  Companies discussed include 1) City Chic Collective - A specialty fashion retailer benefiting from the shift to online sales; 2) Megaport - A leading network-as-a-service provider; 3) EML Payments - A specialist in general reloadable and gift card payment solutions.

Both guests were also asked to nominate a small cap stock with a big opportunity that they think looks attractive right now.  Stotty chose JIN (Jumbo Interactive), and Gary chose BTH (Bigtincan Holdings), and his "Bull Case" for BTH starts from around the 2:50 mark of the video.

Here's what he had to say:

Gary Rollo (Buy):  "Our name today is Bigtincan. We think Bigtincan is a buy. That's a small cap technology stock, software as a service. Excellent business model. It's a company that has gone global. It has a client roster that ranges from Anheuser-Busch, through Nike, up to large tech companies.

What it does is it helps companies manage their sales enablement. That's a growing area of the market. It's growing its top line at 40%. It's a $400 million market cap. It's one of these microcap stocks that are just about to get into that point where larger funds can take a look at it. So, we think the technology stacks up well and it's got a bright future."

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 ---

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.]

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.

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.

20-Dec-2019:  Phillip Capital:  Bigtincan Holdings (BTH):  Sales Enablement Software Leader - Initiation of coverage (BUY)

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 processes 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 Anheuser Busch, Nike, Sephora and Sony Playstation.

• Recommendation: Buy
• Risk Rating: High
• 12-mth Target Price: (AUD): $0.78
• Share Price (AUD, 20-Dec-19): $0.64    (17-Jan-20: $0.725)
• 12-mth Price Range: $0.24 - $0.76
• Forecast 12-mth Capital Growth: 21.9%
• Forecast 12-mth Dividend Yield: 0.0%
• 12-mth Total Shareholder Return: 21.9% 
• Market cap ($m): 195.9
• Net debt (net cash) ($m): (Oct 19e) (25.1)
• Enterprise Value ($m): 170.8
• Gearing (Net Debt/ Equity): N/a – Net Cash
• Shares on Issue (m): 306.2 
• Sector: Information Technology
• Average Daily Value Traded ($): $387,000
• ASX 300 Weight: n/a 

Disclosure:  I don't hold BTH shares and don't have a strong view on them.