Consensus community valuation
$0.305
Average Intrinsic Value
29.7%
Undervalued by
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#ASX Announcements
Added a week ago

Dropsuite announced an 82 % increase in A.R.R. (annual recurring revenue) from the p.c.p (prior corresponding period)

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#ASX Announcements
Added a week ago

Another fantastic result from Dropsuite.

ARR of 11.03 (15% increase QonQ) growing 82% PCP,

Users are now at 518K up 10% QonQ

Monthly APRU continues to grow and they are now basically at breakeven.

continues to have 2.4Mil balance sheet in which the CEO has alluded towards possible M&A activity to expand growth.

Pleasantly DSE was again rewarded with best in class product following a survey now 2 years in a row.

Strong tailwinds with the switch to cloud will continue.

Founder and CEO led company with a lot of skin in the game.

I continue with my valuation of 30c.

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#Bull Case
Added 4 months ago

My first straw!

I work for a small IT MSP (Managed Service Provider) and we were recently evaluating cloud backup services that we could provide and resell to our customers. In the end we chose Dropsuite. 

It was by far the best product we had seen... the problem is that we came across it last minute. I have a few channels that I reach out to and ask what others are using. No one mentioned Dropsuite. No one seems to know about it and yet the product is great. We signed up 3 of our customers in 24 hours and will be signing up as many as possible... because cloud back up is important.

The branding is not great. It's a bad name but hopefully that doesn't matter as the product is great. One feature I love is that we can provide individual mailbox owners (that are being backed up) access to self service restore from backups. It's also stupid easy to set up as a reseller and for each Microsoft 365 tenant that you link to. Within in about 5 minutes you can have backups kicked off for a whole organisation.

The sales process was very good too. We had an online meeting same day and an acocunt to get started within 24 hours. In total less than 24 hours to start backing our clients up. The price is also very good value and accessible, meaning that both of the backup products are very affordable add-ons.

I do not own Dropsuite shares but am very keen to learn more and consider buying some having had first hand experience with the product. 

They need to work on their brand awareness though. I asked about recommended cloud backup solutions in two places that Dropsuite should have been mentioned.

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#Bull Case
Added 4 months ago

Shaw and Partners initiates coverage of cloud-based solutions provider, Dropsuite with a Buy recommendation and a target price of $0.28.

Dropsuite operates in the Backup-as-a-Service (BaaS) market and distributes via its 300-plus Channel Partners to over 430,000 users across North America, Europe and APAC. The company delivered $8.5m in annual recurring revenue (ARR) at December 2020 (up 62.5% YoY or +77.8% YoY constant currency) and plans to propel growth further through extending product functionality and entering new horizontals.

The broker is impressed by Dropsuite’s growth across its suite of key metrics, and notes favourable industry dynamics and product expansion opportunities.

Dropsuite is trading at a historical EV/ARR multiple of 11.7x, which represents a -26.9% discount to the peer group’s latest average historical EV/ARR multiple of 16.0x. However, the broker notes Dropsuite is at an earlier stage of revenue generation and sales cycle conversion than the selected peers.

Shaw and Partners expects Dropsuite to continue investing and reaching profitability by FY22 across an accelerated growth profile.

Disc: I own 

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#Investor Webinar
stale
Added 6 months ago

Dropsuite sells highly customisable cloud software via partners to backup and restore data from cloud software applications such as O365

mmff posted the review of the Q4 results announcement, here are my takeaways from the investor presentation and webinar from this morning

  • Market opportunity - "US $22B Global Cloud Backup Market by 2025 with 24% CAGR, 1 Billion Business Email Users in 2019" - Dropsuite's market opportunity is around 10% of this, current user base 431k
  • More than 260M Microsoft O365 Users growing at 20% p.a.
  • within dropsuite's contracted partners, approx 80% of revenue growth is coming from existing partners Vs 20% from new partners
  • penetration within contracted partner's customers is around 10% i.e. they could win no new partners and continue to have great growth
  • when asked about their biggest competitor - biggest might have 1-2mil end users, definitely single figures (dropsuite 431k) and dropsuite are consistently winning partners over their biggest competitors,
  • dropsuite's biggest opportunity is not from winning customers from competitors, it is the "white space" - customers who are not backing up their cloud data. "84% of companies don’t backup their SaaS application data (US)"
  • no technical barrier to winning white space customers, opportunity can be captured by marketing to, training and impressing partners to encourage them to sell backup solutions to their customers
  • partner numbers reported on are contracted partners, however there has been higher growth in uncontracted distributors of dropsuite software where growth is more like 50/50 between new and existing
  • M&A - not a focus, no acquisitions currently under consideration, no consideration going into being acquired, they see a big organic growth opportunity ahead of them thanks to a structurally growing market
  • tailwind - data privacy regulation expected to become more onerous in 2021 especially in USA, dropsuite's highest growth market
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#ASX Announcement 20/1/20
stale
Added 6 months ago

Quarterly activities report and Appendix 4CRecord Quarter Across All Key Metrics

Highlights

? Annual Recurring Revenue (ARR1 ) of $8.46m, a 20% increase on the prior quarter and a 78% increase on previous corresponding period (pcp) on a constant currency basis

? Users increased to 431k up 14% quarter on quarter and 49% on pcp

? Monthly APRU of $1.64 up 5% quarter on quarter on a constant currency basis

? Normalised Cash used in Operations2 decreased 22% quarter on quarter to ($0.20m)

? DSE ended the quarter with $2.48m cash and    is well funded ($2.89m September 2020) ? Decreasing cash burn rate, and expansion of product offerings and growing ARR, anticipated over the course of 2021 as DSE moves steadily towards profitability and cashflow breakeven

*Includes NO Govt grants or Tax incentives

Disc; I hold

View Attachment

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#Bull Case
stale
Added 7 months ago

Bull case for DSE

Dropsuite is a cloud and data backup SAAS business.

I will make a number of dot points to explain my bull case

1) DSE has had 6 straight quarters of ARR increase

2) subscribers are nearing 400k and this is the area of expected break even 

3) CR completed in March and all directors purchased there maximum allocation of shares allowed $30,000 worth. This was done at 4.5c. The SP is now 16.5c and still no selling has occurred. They are cashed up with ~3mil in the bank and are very diligent with cash. This should get them to break even.

4) a private company Topline capital has been accumulating shares in DSE and now own ~17% of the company. I expect they are targeting 20%. 
5) I see DSE as a possible TO target at this price 

6) DSE has great reviews it is one of the preferred products for email and website backup has won awards and a survey suggests 97% of people who use the service would recommend the products to peers.

7) DSE products is now worldwide in use and is constantly winning partners to expand their product.

8) CEO founded and leads the company. Has a long history in the area and has worked for google prior to this. 

I see DSE still cheap and the CEO seems bullish on the next quarter results suggesting they are strong in a recent announcement. I see this company reaching 20c in the near future.

 

one risk that has occurred in the past is companies potentially developing their own in house products and therefore leaving dropsuite. This risk remains however these platforms are usually sticky and DSE has lowered the amount of reliance on the top 10 customers. Top 10 use to be 90% of revenue whereas this now sits at 70% and is lowering each qtr.

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#Bull Case
stale
Added 8 months ago

#Q3 (ending 30/9/20) Overview

1) Cashburn down 80% QoQ to $0.13m with $2.89m cash left

2) ACV (monthly * 12) up 74% on PcP or 14% QoQ

3) September revenue churn 3% vs pcp i.e. 97% retention

4) Receipts up 61% on PcP or 16% QoQ to $1.69m

5) Growing user base 42% pcp 10% qoq and ARPU 22%, 4%

 

I think dropsuite is flying under the radar as a result of

a) low $59m market cap

b) low $56k average daily liquidity

c) decreased FY19 revenue Vs FY18 (CAGR over 5 yrs ~ 60%)

 

I think it has huge potential

FY20 set to show around 50% revenue growth over FY19,

Higher growth stemming from pivoting focus into backup of cloud email and associated software backup where they have a differentiated product offering.

6 straight quarters of significantly growing ARR since pivoting.

Cloud SaaS offering with 3% churn, CEO owns >5%, COO owns >3%, large growing market opportunity with Microsoft 365 adoption low and growing rapidly, market leading product quality in a very hot space - cloud SaaS, cybersecurity & regulation compliance.

Partner strategy combined with 100% cloud based nature make it very scalable.

Extremely global customer and partner base all through US, UK, EU, Asia, Aus, South America, South Africa

Yet nobody is talking about it, priced at 8 x Q3 ARR, cashflow break even likely within next 2 quarters, likely benefiting from covid i.e. increasing cloud software adoption

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#Q2 2020 Quarterly Report
stale
Added 12 months ago

Solid progress.  Key takeaways:

1) Reported $6.74M on a constant currency basis.  It reported this to be a 13% uncrease on Q1 2020. 

2) Cash receipts of $1.46 M - increase of 28% on  Q1 2020.  

3) Gross margin improvement, now at 69%.  

4) ARPU increase of 4% on Q1 2020.  

5) Cashflow margin running at -44%, a slight improvement on Q2 2019.   

Management claim cashflow will improve meaningfully over Q3 & Q4 - It needs to as they have 12 months of cash left in the bank.   

At a froward EV/S of around 6, and negative cashflow margin above 40%,  DSE is not cheap by any measure, and needs to really reign in the costs to avoid another CR around Christmas.  

DISC. - I hold.  

 

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#Industry/competitors
stale
Added one year ago

Info-tech Research group recently released a report on 7 vendors offering email backup solutions, including Dropsuite.  The review gave rated Dropsuite as the clear winner.  The peers included industry heavies such as Veritas and Commvault.   

Interestingly, a recent similar Gartner report did not even include Dropsuite in the review, and rated Commvault as the overall best offering......

To be well rated against their peers is promising, but it alone does not guarantee service providers will push Dropsuite compared to bigger names.   

 

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#FY2020 Q1 report
stale
Added one year ago

Key take aways:

1) ARR up 28% (17% constant currency)  on prior quarter to $6.65 M.  

2) 9% growth in paid users over quarter. 

3) Bash burn of $632k with cash balance of $3.69m

4) top 10 partners account for 71% or revneue down from 75% prior quarter. 

5) ARPU grew 7% over the quarter.   

6) customer churn fell to 3.2%.  

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