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The H1 results are as announced in the October update; COVID delayed several new contracts until earlier this month, leaving H1 revenue at £5.1m. However, management remained comfortable with a FY sales forecast of £21.7m on the basis of a strong pipeline and the substantial tranche of annually renewed revenue billed each H2. Reassuringly, the new contracts have now been signed for both the Celebrus Customer Data Management (CDM) solution and the Celebrus Customer Data Platform (CDP), and they cover a range of verticals from financial services to automotive manufacture and ecommerce provision. With significant net cash, D4t4 is in a strong position for long-term sustainable growth on the back of rapidly growing global demand for CDP/CDM. It remains confident on prospects in new geographies (N America and APAC) and new use markets (fraud, risk analysis and healthcare) plus a high level of recurring revenue. Our forecasts and target price remain unchanged save for a tweak to cashflow and raised dividend expectation. We reiterate our 310p target price.
Companies: D4t4 Solutions plc
Evoko has announced the launch of its Naso panel. This is its first panel to offer a suite of SaaS software tools and these are supplied exclusively by SmartSpace. Shipments are expected to commence Monday 7th Dec and Evoko points to “amazing interest” in its new product. We believe this will represent a material revenue/GP uplift for SMART (scenarios below). SMRT also updates that SwipedOn continues to see customer and ARPU growth and that it will launch SwipedOn desks from December through early 2021. This has the potential to lead to a “step-change” in SwipeON ARPU (multiples of current ARPU) over time. Our SOTP model for SmartSpace points to a valuation of c. £40m compared to the current £28m mkt cap.
Companies: Smartspace Software Plc
LoopUp has published a trading update detailing a modest miss for FY20, but a materially lower-than-expected run rate as the business moves towards FY21. The shortfall is attributable almost entirely to a faster-thanexpected and more dramatic decline for the LoopUp meetings product in sectors outside the core focus Professional Services segment. We make reductions in estimates to reflect this revised outlook – clearly this is disappointing, but there are a number of positives within the parts of the business likely to drive long-term value.
Companies: LoopUp Group PLC
The Panoply has reported very robust interim results and we upgrade our FY21 PBT/EPS estimates by +5%/+10%. Revenues leapt +58% to £21.2m with LFL growth of +18% (Q1 +10%, Q2 +26%). EBITDA more than doubled to £2.9m, with LFL growth of +37%. Cash conversion was strong and the group has declared a maiden interim dividend of 0.2p. The group had a strong sales backlog of £17.5m at 1st October and we are pleased to note that it is increasingly winning large, multi-disciplinary contracts notably Bloomberg Philanthropies, Land Registry and Planning Inspectorate. These contracts would have beyond the capabilities of the individual businesses before they joined The Panoply and therefore in our view securing these £4m+ contracts vindicates the group strategy. We raise our PBT forecast by +5% to £4.9m (£4.7m). On a maximum deferred consideration basis, EPS is 5.1p (4.8p) while assuming shares are issued at 150p rather than our previous assumption of 120p gives EPS of 6.4p (5.8p). We have re-run our sensitivity analysis using the current share price of 200p and this indicates PF EPS of 10p could be delivered in 2023. We raise our target price to 220p (was 180p) and retain our Buy recommendation.
Companies: Panoply Holdings Plc
Interims describe a steady business where existing clients are generating typically high levels of recurring income but new clients are hard to come by and discretionary spend is under lockdown pressure. Complex managed hosting is fundamental to online processes or presence for many, but the decision to undergo the inevitable digital transformation was too risky for many clients to consider in an obviously disrupted 1H21. Digital transformation acceleration is likely post-COVID, with the need for remote cloud services being all too clear – and iomart’s prospects remain firm, just currently muted, which has restrained the impact of new customer wins and continuing attempts to drive enterprise sales. We trim forecasts, joining consensus, which was already lower, taking revenue and EBITDA down 2% in FY21 and FY22, and adj. dil. EPS down 4% and 6%. We look to robust performance and new CEO Reece Donavan’s current actions, to pick up the pace in 2H21 – benefitting FY22 & FY23, with a simplified structure and renewed vigour one expects from management change. Organic prospects will gain strength as normality returns, while acquisitions are unusually absent but will inevitably return. Target 400p reiterated.
Companies: iomart Group plc
Digital transformation services provider The Panoply has reported a strong H1 21A financial performance in our view. Revenue grew 58% YoY during the period (+18% YoY organically) and adjusted EBITDA by 142%, reflecting the impressive commercial progress made and the impact of acquisitions. Client billings showed a solid improvement on H1 20. Commentary on the outlook is positive and underpinned by a £17.5m sales backlog to March 2021. Overall, we believe this is a very positive release from The Panoply and that the group remains well placed to achieve its targets.
Location Sciences (LON:LSAI), a world leader in location verification for mobile advertising, recently released a trading update for the current year (year-end Dec). The update covers the three product lines — Verify, GeoProtect, and Insights. We provide an overview of these on p2.The update outlin
Companies: LSAI PXAMF 59LA
Following Fonix successfully raising £45m through an oversubscribed IPO on 12 October, we initiate our coverage with a target price of 150p. The investment case is focused upon Fonix leveraging its proprietary, cloud-based platform to expand with existing clients and win new clients within a robust UK phone-paid services market. The structural strength of Fonix’s platform is demonstrated by Fonix experiencing no churn from major customers in the past six years, which reflects that Fonix benefits from strategic integration and strong relationships with its clients. Fonix’s FY20 gross profit and EBITDA grew by +22% and +36% respectively, and we conservatively forecast +11-12% EBITDA and EPS growth in FY21 and FY22. On 12m forward EV/EBITDA of 10x and an EFCF yield of 7%, Fonix looks considerably undervalued compared to AIM payment and finnCap Tech 40 peers that are trading on 12m fwd EV/EBITDA of 17-20x with 7-17% EBITDA growth, and EFCF yields of 1-3%. We base our 150p target price on 15x FY22 EV/EBITDA or a 5% FY22 EFCF yield, and look forward to Fonix’s trading update in early 2021.
Companies: Fonix Mobile PLC
CAP-XX Ltd* (CPX.L, 6.8p/£30.1m) | Tern plc* (TERN.L, 6.85p/£20.6m) | Location Sciences Group plc* (LSAI.L, 0.45p/£1.0m)
Companies: CPX TERN LSAI
TEK's portfolio investment company, Belluscura Plc, has submitted a 510(k) clearance application to the FDA for its XPLO2R™ portable oxygen concentrator (POC).
Companies: Tekcapital Plc
WANdisco has announced a $3m initial contract with a major US telecoms company to migrate a 13PB on-premise Hadoop cluster to the Microsoft Azure cloud using its LiveData Migrator. Most of this will be recognised in 2020 but it also has an opportunity to migrate a further 30PB of data stored by the company in the coming years. We make no change to forecasts, as we believe WANdisco still needs to sign further deals to reach our FY20 estimate, but see the current acceleration in commercial activity as very encouraging.
Companies: WANdisco Plc
WANdisco has announced that its LiveData Migrator product will be integrated into IBM’s Big Replicate. This extends its existing relationship with IBM, and IBM’s decision to integrate LiveData Migrator follows similar moves by both Amazon AWS and Microsoft Azure recently. Those moves have seen commercial activity accelerate in the past few months, with more expected in 2021. No comment on the potential commercial impact of this announcement is provided, but we continue to view the current momentum (see $3m LiveData Migrator contract) as very encouraging.
Earnings in H1A were better than flat and H2E has got off to a good start. Margins are up and so too is recurring revenue as proportion of total business. First half order deferrals are now materialising and renewals are positive. Free cash generation was strong and the outlook is positive. We see no fundamental reason for the recent share price underperformance and we reiterate our Buy recommendation.
Companies: Shearwater Group plc
LoopUp has announced a very strong H1 period, in line with the previous trading update and reflecting a number of months of exceptional performance. This is allowing the business to invest in the major identified new opportunity, to provide telephony within Microsoft Teams, where the early signs are extremely positive. We look forward to further detail on the Teams pipeline and sales levels over time.
H1 results were ahead of our estimates. However, excluding select factors, profits were well above our expectations. Sumo’s strong underlying results positions it to outperform current market expectations. In addition, Sumo announced the acquisition of Pipeworks, which we estimate could drive 18% earnings accretion even based on conservative forecasts. Given the relatively modest share price reaction, Sumo now trades at a lower multiple than prior to the acquisition.
Companies: Sumo Group Plc