On 2 Dec 2022 Bigtincan received an unsolicited indicative, conditional and non-binding proposal from SQN to acquire all the shares in BTH for $0.80 per BTH share. It seems Bigtincan is the one that likes do the acquisitions not be the acquisition. 

https://www.asx.com.au/asxpdf/20221202/pdf/45jcj4nm595008.pdf

Bigtincan is serial acquirer and capital raising company below is a summary of all its capital raisings and acquisitions since listing on the ASX in March 2017.

Capital Raising Summary – Raised Approx $345.5m since IPO, today it’s market cap as of today closing price of $0.54 is $325m (Dec 2022).

·      December 2022 - $35m, Institutional $35m, Retail $5m at $0.60 per share

·      August 2021 – A$135.4m, Institutional $79.4m, Retail $56m at $1.05 per share

·      December 2020 – Institutional Raise $35m at $1.05m per share

·      May 2020 – Raise $42.5m - $35 institution, $7.5m SPP at $0.67 per share

·      September 2019 – Raise $20m institution at $0.54 per share

·      April 2019 – Raise $15.6m – Institution $12.4m, $3.2m Retail at $0.42 per share

·      June 2018 – Institutional Raise $15m at $0.35 per share

·      March 2017 Raised $12M at IPO $0.25 per share

Bigtincan Acquisitions Summary

·      December 2022 – SalesDirector.ai US$1.2m -leading revenue intelligence and data platform

https://www.asx.com.au/asxpdf/20221228/pdf/45k76z9tjwfcf1.pdf

·      October 2022 – Wanted to Acquire LiveTiles (ASX: LVT)

https://www.asx.com.au/asxpdf/20221118/pdf/45hs5hh4h115ml.pdf

·      August 2021 – Brainshark A$116m – a leader in sales coaching, learning and readiness based in Massachusetts, USA

https://www.asx.com.au/asxpdf/20210823/pdf/44zl4y0ggcngd6.pdf

·      June 2021 – Vidinoti ~$770,000 (550,000 Swiss francs) – leader in augmented and virtual reality systems based in Switzerland.

https://www.asx.com.au/asxpdf/20210617/pdf/44xfxkyjt53jch.pdf

·      January 2021 – VoiceVibes US$2.0m – AI-Powered coaching and sales. Guidance to life.

https://www.asx.com.au/asxpdf/20210115/pdf/44rrgjhrqcgpr4.pdf

·      December 2020 – ClearSlide US$16.25m – a sales engagement technology platform leader with hundreds of customers across three continents.

https://www.asx.com.au/asxpdf/20201223/pdf/44r80c7nd2fsx6.pdf

·      October 2020 – Agnitio upfront Approx A$3.3m (DKK 15m), Approx A$1.65m (DKK 7.5m) defer condition payable based on target revenue – Danish company and pioneer in sales enablement for rthe life science sector.

https://www.asx.com.au/asxpdf/20201008/pdf/44ngl4ybd9pvv3.pdf

·      September 2019 – XINN US$4.5m upfront, US$0.5m first anniversary, issue of BTH shares value US$2.5m -based Boston next generation of document automation for sales enablement.

https://www.asx.com.au/asxpdf/20190930/pdf/4490668w54319c.pdf

·      September 2019 – Asdeq Labs A$490,000 – Australian software company delivering mobile service enablement out-of-the-box.

https://www.asx.com.au/asxpdf/20190905/pdf/44881kjx8csqc0.pdf

·      Septemeber 2018 – FatStax USD$1.8m plus conditional deferred cash consideration of US$1.2m based on annual recurring revenue – a leading provider of SaaS sales enablement software to the manufacturing industry in the USA

https://www.asx.com.au/asxpdf/20180925/pdf/43ylz82jtk6c87.pdf

·      June 2018 – Zunos Technologies A$3.25m plus payout of recurring revenue – a leader in engaging mobile, micro-learning and gamification training

https://www.asx.com.au/asxpdf/20180618/pdf/43vv86mz3v4w5w.pdf

Previous held Bigtincan shares years ago but currently do not hold or plan to hold shares. PS I have always thought the name Bigtincan was stupid.

Of course they did...

...of course it's not.

But why is the announcement price sensitive if the return isn't?

[Not held]

So we thought we might get a bidding war and instead we see a capital raising. Is anyone else confused?

Trading halted pending cap raise:

The trading halt is requested as BTH expects to make an announcement to ASX in connection with a material capital raising by way of an institutional placement (Placement) and a share purchase plan.

https://www.listcorp.com/asx/bth/bigtincan-holdings-limited/news/trading-halt-2325701.html

Ann today of "Unsolicited, Non-Binding, Conditional Offer from SQN Investors" of 80c a share. 45jcj4nm595008.pdf (asx.com.au)

SQN is an existing shareholder with 13.6% of BTH and Farouk Hussein, a partner of SQN is a director of BTH.

Given that this is an inside job we've got to wonder what they know that we don't. Is there hidden value in BTH that the market can't see? Is Farouk looking to protect their substantial investment from further losses by going all in and presumably doing things differently.

Is having the CEO on the review committee a conflict of interest? Presumably he will be replaced if the takeover goes ahead.

"Bigtincan also notes that it has had preliminary discussions with other interested parties" Did they run away screaming after looking at the books. This could be just talking up the price because if they were serious, it would have been announced to the market.

Also "SQN have not been provided due diligence access at this time." but with a director on the board, they should know everything, right?

So as investor, what to do? Buy at 80c and hope for a bidding war? Sell at 80c to avoid the risk that this falls over? Wait and see?

I'd take the money and run but as you can probably guess by my other posts, I don't hold.

Take over offer received to buy BTH for $0.80 a share (offer from SQN Investors LP (SQN))

https://www.abnnewswire.net/press/en/115208/Bigtincan-Holdings-Limited-%28ASX-BTH%29-Unsolicited-Non-Binding-Conditional-Offer-from-SQN-Investors.html

Sydney, Dec 2, 2022 AEST (ABN Newswire) - Bigtincan Holdings Limited (ASX:BTH) (BGTHF:OTCMKTS), a global software company providing a leading AI-powered sales enablement automation platform, announces that it has received an unsolicited, indicative, conditional and non-binding proposal from SQN Investors LP (SQN) to acquire all of the shares in BTH for A$0.80 cash per BTH share ("Offer Price") by way of scheme of arrangement (Indicative Proposal). 

Just saw that BTC was late releasing a bunch of 3Gs with share issues going back to April. That's not good but maybe a one off.

This is more alarming. I was just taking another look at BTCs financials and there are substantial differences between the Appendix 4E results released on 30-Aug-22 and the Annual Report, released on 3-Oct-22. WTF! These should be the same facts. For instance, compare the 4E note 4 Cost of sales and other expenses with the Annual report Note 5 Expenses, which is effectively the same note with almost completely different figures!

eg, they found an extra $12M in Wages and Salaries! How can the numbers change so much? Shouldn't this be explained?

Did the CFO sign off on this? Wait, they don't have one. It was signed by the non-exec Chairman and a non-executive director.

I had a look at the Auditor's report which identified the following Key Audit Matters: 

• Revenue recognition
• Accounting for business combinations
• Capitalisation of software development costs. 

It's riveting reading but KPMG signed off on the final figures. Interesting to consider what else should be a key audit matter. Did they check receivables? Did the changes above come from the audit?

BTH has released a double edged announcement today. First the good news, they have Zoom meeting integration now.

Second bit of news is that they have withdrawn from the Livetiles acquisition. Second may actually be good news given the lack of transparency from their takeover target and a call from investors for a meeting to discuss spilling management. Perhaps a dodged bullet.BTH.pdf

It's interesting what BTH do and don't say in the latest quarterly report.

Cash flow improved but I'd want to see the half yearly to understand this number. Looks like they've moved some of their costs from Investing (where they capitalise software dev as intellectual property) back to operating, but this seems to be carefully managed to maintain a positive and growing operating cash flow. FCF is still negative - the bleeding hasn't stopped.

There is no mention of their current ARR, which they should know. Last quarter it was quoted as $120M. I'm trying to reconcile this statement, "Bigtincan is on track for FY 23 guidance of ARR in the range of $137-143m and revenue in the range of $123-128m." So FY23 revenue is not much ahead of the ARR that was already contracted last FY, so there must be a lot of sales expected in the back end of FY23 that will boost closing ARR but only contribute a part-year of revenue. Hmmm.

Lastly, costs (as indicated by the c/f) rose significantly - almost as much as receipts. There is no conclusive proof of economies of scale or great synergies from their acquisitions. Maybe we can deduct some one-offs but there will always be something slightly abnormal happening and we shouldn't always add it back.

Last thought is exchange rates. Much of their revenue is in USD but also their costs. Maybe the falling AUD is boosting both?

I await their half-yearly to make a better assessment.

On the proposed acquisition of $LVT, $BTH have said

"To date, Bigtincan has received very limited engagement from the Board of LiveTiles, beyond acknowledgement of our proposal. Whilst the Board of Bigtincan believes the combination of the LiveTiles business with Bigtincan is a compelling opportunity for shareholders, without genuine engagement from LiveTiles and the opportunity to undertake due diligence, Bigtincan is unlikely to be in a position to make a formal proposal, but reserves the right to do so." 

Maybe (and just spitballing here), the reason why $LVT hasn't replied is that they realise that what stands between today and a profitable business for $LVT is all the management, board and sales and marketing costs that wouldn't be need if $BTH swallowed it. Just saying.

While online, my usual CF analysis is below. You can see the effort over the last 3Qs to manage operating and investing expenditure. What's positive, is that during this time, growth in receipts has held up well. If this continues then maybe $BTH starts to become interesting again.

So, I hope the $LVT acquisition doesn't once more muddy the waters. More than happy for the calls to go unanswered. But given the early shoots of progress towards a profitable business, I don't know why $BTH doesn't just focus on execution and organic growth.

Disc: Not Held

Bigtincan (BTH.ASX) released their Quarterly and 4C today. From their announcement:

Q1 FY23 Cash Flow Highlights

• Total quarterly customer cash receipts of $37.7m, an increase of 162% vs Q1 FY22, and up from $31.3m in Q4 FY22, an increase of 20% Qtr on Qtr.
• Positive operating cash flow quarter, with cash operating payments of $37.5m (including $2.8m of one-off severance and other costs related to business adjustments conducted in the Quarter).
• Capitalised investments reduced by 25% from $4.7m in Q4 FY22 to $3.5m in Q1 FY23, as development projects were completed and new products came to market.
• Bigtincan achieved its fourth consecutive operating cash positive quarter, and fifth in six quarters.
• Bigtincan held $35.3m cash and cash equivalents as at 30 September 2022 and is on track to achieve cash flow breakeven in FY23.

Q1 FY23 Trading Highlights and Outlook

• Reached the 12-month anniversary of Brainshark acquisition, achieving positive financial and strategic benefits for Bigtincan’s multi-Hub business model.
• Bigtincan won market recognition including 2022 Sammy Award, and Software Reviews Sales Enablement Emotional Footprint.
• New customer wins in the Quarter included: HSA Insurance, Assurant, XPO Logistics, eBay. Expansion deals closed included: Cisco, Convatech, Anaplan, Cigna, Farmers, Fidelity, Seagate, Google and Allurion.
• Strong roadmap progression with new releases across all Hubs.
• Bigtincan is on track for FY23 guidance of ARR in the range of $137-143m and revenue in the range of $123-128m.
• FY23 positive adjusted EBITDA forecast to materially exceed FY22.

Another quarter of "positive operating cashflows" however Free Cash Flow was still negative at around -$3.6m. Although they did mention that $2.8m of this was relating to one off costs. Without these costs, operating cash flow would have been around $3.1m. I'm hoping that they are able to become free cash flow breakeven later this FY as they have stated is possible.

The Brainshark acquisition actually seems to be a positive as it generated $3.6m of NPAT for a company they bought for $116m a year ago.

BTH also updated on its announcement of the potential acquisition of Livetiles. Management mentioned that Livetiles has acknowledged the proposal but have had limited engagement. Seems like it is still very early stage at the moment as due diligence has yet been undertaken.

Overall a fairly good quarter from BTH. Still on the cusp of being Free Cash Flow positive and hoping that they are able to make the inflection point later this FY,

Disc: Held IRL and on Strawman.

Here we go... again..?

Bigtincan announced that they are in conversation to acquire Livetiles (LVT.ASX). Announcement below:

Bigtincan Holdings Limited (ASX:BTH) (“Bigtincan”, the “Company”), a global software company providing a leading AI-powered sales enablement automation platform, confirms (in response to recent media speculation) that it has made a confidential, non-binding, indicative proposal to acquire 100% of the share capital of LiveTiles Limited ACN 066 139 991 (LVT) by way of scheme of arrangement (Indicative Proposal).

Under the Indicative Proposal, LVT shareholders would be entitled to receive A$0.07 cash per share, less any dividends or distributions paid to shareholders after the date of the Indicative Proposal. The Indicative Proposal contemplates LVT shareholders being given the option to receive part of the consideration in the form of shares in BTH.

The Indicative Proposal is subject to a number of conditions, including (but not limited to): • completion of satisfactory due diligence;

• no disposal of any of LVT’s material assets;
• no material change to LVT’s assets or prospects; and
• entry into a scheme implementation deed on customary terms and conditions.

Discussions between BTH and LVT are preliminary in nature. No agreement has been reached and there is no certainty that any transaction will eventuate.

Announcement from Livetiles indicates that, should the acquisition go ahead, it will be funded through cash reserves and a capital raise.

Not sure what I feel about this. BTH has been on an acquisition trail for a while funded by a lot of capital raises and not sure shareholders will be willing to fund another acquisition for a company that isn't profitable (albeit at a very depressed share price).

Disc: Held IRL and on Strawman

I can't make much sense of the FY22 full year results. Licence revenue of $102M is ok. H2 of $62M operating revenue looks good. A pity so much is not subscription (see point 6 below). There's $50M of operating revenue from BrainShark for the 10 months since 8th Sept 21 (note 15b) which is good. Should be > $60M next FY based on run-rate. Turns out BS is doing more than the rest of the firm combined.

My frustrations include:

1. Note 4 does not reconcile to the P&L: $75M employee costs + $54M other = $129M vs $127M in P&L

2 D&A of $11M is not broken down. What is in this number? D&A wasn't reported in the half yearly at all. There's $3.4m depreciation of intangible assets in note 9b. What is the rest?

3 EBITDA doesn't make any sense, let alone "adjusted EBITDA". Here's my calc (in millions) bottom up.

• (22) loss before tax
• 9 net finance cost - mainly FX gains
• (11) D&A
• (20) EBITDA

From the top, it's the same, $95M GP, ($126M operating costs less $11M D&A) = ($20M) loss.

4 Segment reporting is useless. Would love to see Brainshark separately since it's > 50% of monthly revenue.

5 There is $112M of intangible assets, possibly worthless. $40M for "Customer List"! Really?

6 No explanation on why professional and contract revenue jumped up to $6M. Was $735k in first half, $1,330 in total last year. Another mystery.

7 There is less information on bad debts in this report than last year. DSO seems to be down a lot though, which is good.

8 Cash burn of $20M ($10M each half) when you include PPE and capitalised development costs. That gives them about 2 years to turn this around, more likely 18 months till they need to raise capital.

Key issues for BTH remain: Can they grow (except by acquisition)? Can they ever be profitable?

As usual, management are cherry-picking the comparisons. YoY looks good but that's because of acquisitions.

QoQ ARR barely moved from $119k to $120k so the losses equal the wins and expansions. It's likely >$1k is from "immaterial acquisitions" so core business is actually going backwards. We were told that covid was restricting their sales force but that shouldn't be a factor now.

Cash flow looks manipulated. A wafer thin operating CF of $49k seems to have been achieved by capitalising more of their development costs as "Intellectual Property" in the investing section. Will be interesting to see if they are actually amortising this IP when the P&L comes out. Bottom line is that cash burn increased and they are down to ~8 quarters remaining.

Nothing here indicates that this will be a sustainable profitable business any time soon.

Bigtincan released its Quarterly Report and 4C today. From their release:

• Total quarterly customer cash receipts of $31.3m, an increase of 113% from Q4 FY21 cash receipts of $14.7m, and in line with the Company’s forecasts for FY22.
• Cash operating payments of $31.2m (including Brainshark integration investments), a decrease of $2.6m from Q3 FY22.
• Bigtincan achieved its third consecutive operating cash positive quarter.
• Bigtincan held $39.3m cash and cash equivalents as at 30 June 2022.
• Annualised Recurring Revenue (ARR) of $120m at 30 June 2022, a 126% increase from 30 June 2021. 

Hard to determine if I like this set of results or not. Obviously maintaining positive operating cash flow is a good sign however this is not the full picture. BTH spent close to 6m in "investing activities" which meant that they burnt more cash than the last quarter.

They also mentioned that they made 2 immaterial acquisitions in the quarter to increase skills in particular verticals. This hasn't been announced previously to the market.

Management are still targeting free cash flow breakeven in FY23 and they should have enough cash to make it there without a raise but will be watching this closely.

Disc: Held IRL and on Strawman

Bigtincan announces $3.3m contract extension with global financial services company

Bigtincan Holdings Limited (ASX: BTH) (“Bigtincan”) confirms that it has signed an extension and expansion to an existing contract with Fidelity Workplace Services LLC. The relationship has contractual commitments through to 30 June 2025. This contract is the single largest contract signed to date using Brainshark technology. Brainshark, Inc was acquired by Bigtincan in September 2021. 

Bigtincan is also releasing its Quarterly Report and 4C tomorrow with an Investor briefing at 11am.

Disc: Held IRL and on Strawman

Historically i have been a bull on Big Tin Can but Pinch of Salt provides some good insight in weighing up the reasons to buy or sell.

Some further considerations,

The coming year will wash out the strength of the Brainshark acquisition in terms of numbers and being able to assess the ability to be profitable in FY23 or FY24.

Assuming if cash receipts in Q3 of 34.3m are annualised this would equate to revenue 137million over the coming 12months . This would put BTH on a price to sales of 2.5x. This would also equate to revenue which would be 25% up on FY 22.

Historically BTH have traded on a 6x + price to sales .

Current price is I feel a reflection fo current times whereby tolerances to anything unprofitable and average growth are not rewarded.

David Keane has been buying shares 27k @ 0.67c on the 9th March 2022 and 55k @ 0.92c on the 1st Feb 2022. Overall there is low insider ownership which presents as a red flag for me.

David CEO and Co founder owns 0.2% or 1.1million shares .

Disc Holder in RL and SM

Still burning $4M per quarter and no sign of this slowing down. Don't be fooled by "operating cash positive" - they seem proud of "$4.4m in Q3 Cash investment into capitalised development software". Who knows if that's new product, "50 features shipped" or support & maintenance? Maybe there is a blockbuster new product in the skunkworks but I doubt it.

Looking at "Q3 FY22 Trading Highlights & Outlook" there's nothing to cheer about. Under "New Wins and Expansion" there is no detail on deal sizes or whether the customers are new logos or expansion. Also, no stats on retention. There wasn't any significant new customer win announced during the quarter. Guidance on ARR and revenue is steady. And no comment on how the Brainshark acquisition is doing. Is it saving the day or dragging the average down? To be fair, Q2 & Q4 are usually the strong sales quarters.

SP down a cent to 61.5c on a day when the market rose 1.3%, so I'm not the only one unimpressed.

It's easy to tout YoY growth when you've made a massive acquisition. Show me the money! (ie PBT).

Bigtincan reported its quarterly this morning. From their release:

Q3 FY22 Cash Flow Highlights

• Total quarterly customer cash receipts of $34.3m, an increase of 181% from Q3 FY21 cash receipts of $12.2m, and on track against the Company’s forecasts for FY22.
• Cash operating payments of $33.8m including Brainshark integration investments.
• Bigtincan achieved $0.5m in positive operating cash for the Quarter, including payments of $0.6m in costs related to the integration of Brainshark.
• Bigtincan held $45.4m cash and cash equivalents as at 31 March 2022.

Q3 FY22 Trading Highlights and Outlook

• Bigtincan was awarded a Gold Medal in the 2022 SoftwareReviews Sales Enablement Data Quadrant Buyers Guide Report.
• Bigtincan conducted its FY22 Investor Product and Tech day detailing the Company’s product strategy.
• New wins showcased the growing strength of the multi-Hub product model.
• Product launches during the Quarter included launch of VR Showrooms, and Bigtincan for Salesforce demonstrate innovation and leadership in the market.
• Bigtincan is on track to achieve or exceed $119m in ARR and $109m revenue for FY22. 

BTH seems to be generating good cash receipts following the acquisition of Brainshark which they are now incorporating into their reporting. However cash outflows also increased and overall cash flow from operations was down compared to Q2. Most of this seemed to be related to an increase in staff costs. Another $4.4m was also spent on long term product development resulting in a free cash flow of around -$4m.

Given the SaaS business model and the fact that only $1.1m of cash receipts of the $34.3m was for multiyear deals, I'm hoping that there is further growth in Q4 which is usually quite a strong quarter historically and that the business can become free cash flow positive soon.

Disc: Held IRL and on Strawman.

Another director buying at 0.67c a share. An on market purchase of 41k shares = $27k as an on market purchase.

This follows other directors purchasing at approx. 90c a share a few months back.

I dont really understand the general backwards trend in shareprice for this recently. The general change in sentiment towards growth stocks, increasing likelihood of rate rises in the near future explains a portion of it but the more recent downtrend seems extreme. Now down approx 50% from all time highs despite seemingly every metric going in the right direction.

I admit being a bit out of touch with strawman recently due to my personal life totally taking over (and yes this sounds like an excuse for my underperformance). That said though I thought following the last results announcement that everything looked rosy, then insiders started buying and now we have a further downtrend and more insider buying.

Considering buying more IRL, to match my incremental purchasing in strawman.

Would love to hear a counter thesis to this (very) limited discussion.

While the top line growth for this half year looks good, it comes from their acquisition of Brainshark in September - about four months of Brainshark are included. Of concern is the increasing operating loss, $11.5M for the half (but to be fair this includes $8.3M of one-off acquisition costs).

In this half they capitalised $7.8M of development costs. If that were in operating costs, the operating loss would be so much higher. Total capitalised development costs is now 19M and only now has any amortisation been applied, a mere $200k. Amortisation is not shown separately on the P&L which is odd. Other SaaS companies that I've looked at are much more conservative in capitalising development.

Trade and Other Receivables blew out to $33M (more than double). There is no break-down of this in the half year but the FY21 full year has some detail (before Brainshark) - worth a look.

Management's preferred metrics of EBITDA, Adjusted EBITDA and ARR are not GAAP measures and not subject to audit and not really explained in detail (where's the amortisation expense that's in note 7?).

How does "sustainable ARR of $99m at completion [Sep 21]" get to $119m eight months later? If that's sales at June 30, it won't show as revenue till FY23.

Co-founder David Keane has recently bought $55K of share in BTH within the last week at $0.93. Not a significant investment, however appears to be the largest investment of an insider in the last 12 months.

BTH SPP documents delivered to eligible shareholders today. Remember, all eligible shareholders, you only have 7 business days (5pm on 8  Sep) to get your money in. And remember that bPay typically uses up 2 or 3 of those days.

A 12% discount has now become close to 50%, and a fully under-written, pro rata accelerated non-renounceable entitlement offer at that - I.e. no scale-back. It seems a no-brainer to participate.

I haven't seen a retail SPP this sweet before.

I much prefer SPPs that are executed as this one has been.

BTH went into a trading halt today to announced an acquisition of Brainshark a US company.   They will be capital raising for institutional as well as retail investors.

I understand it will be a 1 for 4 offer released for retail investors 30 August 2021.  Price will be $1.05 per share which is appx 12% discount from close of trade last Friday.

The BTH presentation was too large to load so I might have to reduce it somehow  

Brainshark is an industry recognised and multi-awarded leader in its field of sales coaching, learning and readiness. This field is now a critical component of broader solutions for enterprise customers in the fast growing and larger global sales enablement market. The combination of Bigtincan and Brainshark significantly accelerates Bigtincan’s scale, technology and customer base to now position Bigtincan as a scaled market leader.

BTH - Voice vibes acquisition.

Interested in the value that voicevibes may provide for BTH in assisting sales teams to be quick, efficient in relation to  providing proactive feedback to improve sales pitch. 

I was impressed when listening to the customers and BTH team on their Product and Technlogy Webinar on the 13th April this year.

Not sure if others tuned in but keen on obtaining others views as for many this is a very effective manner in which to learn .

Further to Tom73 Straw, BTH was cash flow positive for the qtr. Also the ARR now stands at $53M and cash expenses for the entire FIN 21 yr were $41m.

The big deal here is that assuming expenses remain in check, BTH are now moving into a good cash flow positive position.

Bigtincan’s update (attached) was solid, highlights:

·         FY21 ARR of $53.1m, up 48% YoY, organic growth was 29%.

·         FY21 Sales $43.5m in line with guidance ($43-44m) is up 34% YoY

·         Cash of $56.7m, Q4 receipts of $14.7m up 40% PCP excluding multi-year payments (ie normalised basis), Operating cash flow break even for Q4.  FCF -$2.0m for Q4 and likely to remain negative for FY22, but well covered by cash on hand.

·         New technology offerings as detailed in the Product and Technology Investor event held 28 April 2021 including launch of Hubs Product Strategy.  Worth an hour to look at the video (particularly the part on VoiceVibes) at:  https://investor.bigtincan.com.

I first bought BTH in mid 2018 and have topped up twice since.  My current valuation sits at $1.38 (not on Strawman) but needs updating and when I do on release of the annual report I will publish on Strawman.  In the mean time I am comfortable holding around this value and below

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 *

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."