BTH 1HFY21 results

• ARR +50% to A$48.8m
• Revenue +32% to A$18.9m (organic revenue +29% to A$18.3m)
• Retention was stable at 89% GM was 85% vs 86% pcp
• EBITDA A$3.6m loss
• BTH reiterated it expects to be at the top end of the A$49-53m ARR guidance and A$41-43m revenue guidance ranges,assuming stable FX and customer retention during integration.

Risks to Upside 

• Stronger-than-expected sales efficiency
• ARR expansion from new products + acquired capabilities
• Maintaining high NRR rates
• Accelerating new client wins as market matures and shifts to integrated solutions

Risks to Downside

• increasing competitive intensity
• Sales execution risk
• Limited upsell/cross-sell opportunities
• Increasing churn

https://finance.yahoo.com/news/edited-transcript-bth-ax-earnings-000100618.html 

Continuing Strong Growth into Global Market

1H FY21 Highlights

1H FY21 Highlights

•  Annualised Recurring Revenue of $48.4m - growth of 50% vs 1H FY20
•  Revenue of $18.4m - growth of 33% over 1H FY20
•  Lifetime Value up 44% to $363m
•  Two strategic acquisitions to support future growth and technology innovation
•  Ongoing market recognition to further build strength in the global market
•  Investments in technology team to sustain product advantage
•  Well capitalised for growth with $65m in cash *

One of the competitors of BTH Bigtincan is Highspot. On Feb. 22, 2021 — Highspot, a sales enablement platform, announced it has closed $200 million in Series E funding led by Tiger Global Management, with participation from new investor Bain & Company. The round included all existing investors and values Highspot at USD $2.3 billion!!!

As per my own blog that valuation is higher than the entire Sales Enablement software market has in annual revenue right now! Also note the number of competitors in this space https://airtable.com/shrVymyNroLHGsElL For the blog see https://salesenablement.wordpress.com/2020/05/24/sales-enablement-saas-software-market-trends-and-a-first-acquisition-during-covid-19/ 

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 ---

Looking at Bigtincan is like looking at all the acquisitions 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 has plugins with Salesforce and Microsoft Dynamics. The acquisition is strategic in nature to build the data science team. 
2. Zunos - 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 add additional Channel Partners including Telstra in Australia. At this time there was 12 fortune 100 customers. There is an $11M cap 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 - 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 - 25th July 2019, paid $1.8M in cash and brings ARR ~1.1M from the 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 - 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 - 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 XINN, hence a  very high retention rate.  
7. Agnitio - 8th October 2020, paid $3.3M and will pay another $1.65M based on target revenue and subscription revenue earned in the 6 month period commencing 1 October 2020. A Danish company founded in 2001 specialises in sales enablement for the life sciences sector primarily in Europe. Agnitio has estimated they bring ARR of A$1.6M from 3000 users across 45 countries. This acquisition works well for Bigtincan as they bring 20% of revenue from the life sciences sector. With Agnitio, Bigtincan should aim to increase revenue per existing life science customer.        
8. Clearside - 23 December 2020 Their largest acquisition to date. They will pay A$23M at a 3.1x ARR (US$5.2M). It is a "strategic" acquisition - it better be you are paying $16M from shareholders pocket. Some major customers Clearside have are NBC Universal, The Economist, Aflac, web.com and Comcast Spotlight. How Bigtincan aim to increase revenue from those customers is a big question mark.
9. Voicevibes - 15 January 2021 Paid US$2M based on just the technology. No meaningful revenues. Only the tech, which is "automated coaching and sales guidance". Shocking, to say the least, and is the final straw for me. Burning shareholder capital with this acquisition.       

They raised $35M last year from institutions of which $17.5M is expected to use for future acquisitions. Looking at the report card, around A$25M went towards acquisitions. I cannot trust this management with future capital raises. I attached a graphic below showing what the current landscape looks like for the sales enablement market. I counted 16 companies there excluding Bigtincan and Clearslide, which to me signals 16 more acquisitions. That is insane, as they are burning shareholder capital in the process.  

The acquisitions that make sense are Zunos, Fatstax, XINN and Agnitio. Those acquisitions increase market share and enable cross-selling to large customers. The others do not make sense to me. Buying Asdeq to enhance product development, surely they can use $400k to build it internally. Same can be said with Voicevibes. As mentioned in the previous version of this straw, Contondo we still don't know what happened, no mention of them in recent reports. More importantly, Bigtincan does not show revenue breakdown from each acquisition. They quote the total ARR which is ambiguous as we have no clue how they got that. It has to come from acquisitions but which acquired company generated that revenue? This is a massive red flag for me. 

The volume of acquisitions does my head in, ARR has grown but they are burning shareholder capital left, right, centre. Their reason for all these acquisitions would be to "own" the sales enablement market. There are 16 more competitors to go after so many more capital raises for shareholders to foot the bill. Notice management guidance is purely topline, nothing for the bottom line. With the latest spree of acquisitions, a J Capital type of report is getting more likely. The reason being, with all these acquisitions, there might be some accounting tricks involved to make the numbers look better than currently reported. There is no transparency on the revenue driver for the business or which subsidiary drove the revenues? Shareholders have shown a lot of loyalty to the company with last year's SPP. This is the last straw for me, as Bigtincan is using the same strategy as WiseTech and it is not how I like to invest. 

Another 4C showing very solid growth. $10.5M in customer receipts vs a full year $15M receipts.  
achieving guidance and expecting to growth further. 

BTH has acquired a company that's software that can measure human perception of voice. BTH will integrate it with their platform so that clients can train their salespeople. This sounds like a really nice addition. THe platform already has the content, so now salespeople can be better at delivering it.

• Bigtincan has acquired 100% of VoiceVibes, a Baltimore, Maryland based company and leader in voice analytics for US$2.0 million.

• VoiceVibes’ technology provides automated coaching that helps people sound more natural and polished when they speak, so they can transform how others perceive them.

• VoiceVibes patented technology, when added to Bigtincan’s core sales enablement automation system allows Bigtincan to offer automated coaching and sales guidance.

VoiceVibes’ proprietary data set is one of the largest in the world that can measure human perception of voice. This vast data set is used to figure out how humans perceive emotion and intention from your voice. An independent study by Towson University showed that VoiceVibes successfully predicted 11 "vibes" (ways a human would perceive a voice) with at least 97% accuracy, and all 20 vibes with at least 90% accuracy.

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 ---

Since the Dec 19 $14.9m customer cash receipts, has gone $10.4m and now $4.5m (down 15% on pcp).

Was once cash flow positive, but with quarterly operating costs at $11.5m, there was $7m operating cashburn for the quarter. At this cost base, the company is not profitable in the next year on a runrate basis with an FY21 target for customer cash receipts of $41-44m (they claim this target still hold with a usually soft Sept qtr but they will need $13m quarters again) 

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."

Looking like fair value now. I found this a balanced review here

#bullcase  Bth moving quite well after being acquisition heavy previously.

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

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?

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 ---

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.