Strong finish to 2019 – well set for 2020
Sopheon has delivered a trading update for 2019, highlighting revenues and cash both slightly ahead of our expectations, and with EBITDA “in line with market expectations”. We take a good degree of reassurance from this performance, which includes a strong uptake of the SaaS offering. We make no changes to 2020 estimates, but clearly today’s update is a positive both for sentiment and near-term business momentum.
28 Jan 20
Small Cap Feast
Intention to float by Gemfields Group. No Capital Raise. Currently listed on JSE. (GML:JNB) at circa £122m. The Group's key producing assets, the Kagem emerald mine in Zambia (believed to be the world's single largest producing emerald mine) and the Montepuez ruby mine in Mozambique (one of the most significant recently discovered ruby deposits in the world), are both expected to have long mine-lives with potential for expansion. Also owns the Faberge brand. Due Valentines Day 2020.
SPE ITX EYE CNC ANX ONC NFC BOD FEN ECSC
28 Jan 20
Pipeline remains robust with growing SaaS content
Sopheon’s trading update confirms that some of its customers are delaying decisions on contracts because of uncertainty prevailing in their own markets and businesses. At the time of the interim results, Sopheon’s management expected a return to a stronger second half weighting for the full year numbers. That is still the case and the Group continues to highlight the strength of the new business pipeline and a higher proportion of SaaS (Software as a Service) opportunities. Nevertheless, the anticipated signings of a number of opportunities have now slipped into 2020. With revenue visibility currently at $28 million, we conservatively move our current year revenue estimate down 13% to $29 million with a knock-on effect on EBITDA (down 29%). We also assume that buying cycles remain extended during FY 2020E and therefore take a prudent view on our numbers for that year as well with revenue and Adj. EBITDA estimates reducing by 10% and 40% respectively.
11 Dec 19
Four plays for growth
Summary – In this report we outline the investment case for four companies that we believe have transformative growth potential: Bigblu Broadband, Audioboom, ULS and Beeks. We also include the current sector valuation, our recent research, and a profile of all of the companies covered by the 4-strong Tech Research team at finnCap.
SPE ALT AMO CTP 9537 D4T4 DOTD ELCO WJA IDEA IGP IOM KBT MAI MMX NASA NET QTX QXT RCN SRT TRMR TEP UNG ZOO PTRO TRCS IQG TCM PCIP KRM FTC BGO ACC ARC
29 Nov 19
Interims in line with recent update
Sopheon’s interim results reflect a return to a stronger second half weighting, as flagged in July’s trading update – although EBITDA is $0.5m ahead of the number in that announcement. Alongside the delays in closing some license contracts in the first half, management reiterates the strength of the new business pipeline and the supportive underlying market conditions, and notes customers apparently reverting to a year-end buying pattern. With a sharp increase in the proportion of SaaS business in the pipeline – reflective of industry procurement trends - we expect to see higher recurring revenues over time (bringing greater visibility) and enhanced lifetime customer revenue. Chairman Barry Mence comments that the future prospects for Sopheon ‘have never been brighter’ when highlighting the positive trends for the Group in the outlook statement – and we note the pipeline and the long-term value being built within the growing SaaS business.
22 Aug 19
Strongest ever pipeline accompanies SaaS transition
Interims to June report performance in line with unchanged expectations. Our previous note title, “sunshine and Cloud”, remains appropriate: with targeted expansion in sales resources, the group has experienced 48% growth in the total value of pipeline deals since January, with all-time highs in volume of larger opportunities, within which SaaS business has expanded sharply. Against an unusually strong 1H comparative, we are confident of FY forecasts, tailored for 2H strength as well as increasing proportion of SaaS deals, which will also enhance multi-year visibility. Underlying commercial momentum is increasing in tandem with Sopheon’s earnings quality from growing recurring revenue (currently $15.3m ARR), as the use cases of the Accolade software product broadens and with it the sales funnel. Target 1,425p reiterated.
22 Aug 19
The mixed blessings of SaaS
Sopheon’s H1 2019E update states that revenues and EBITDA will be lower than H1 2018, at around $13.7m and $2.0m respectively. This is as a result of a delay in closing some licence contracts (and H1 2018 was a tough comparator). Further, although the group is enjoying a very strong pipeline (up 48% in value since January), “an increasing proportion” of this pipeline is likely to be SaaS, so H2 revenue is unlikely to be sufficient to reach consensus full year estimates. The result of a greater number of SaaS licenses should be an increase in revenue visibility over the longer term and a fillip to recurring revenue in FY 2020 and beyond; however, it impacts revenue recognition in the near term. Full year revenue is now expected to be similar to FY 2018, and we are reducing our estimate for FY 2019E by 8% with EBITDA decreasing by 22% to the figures below. We also reduce our estimates for FY 2020E by 5% and 14% respectively – hopefully this will prove conservative. We hope to see a good increase in annualised recurring revenue during H2, which will underpin estimates for 2020 and beyond.
24 Jul 19
Morning Note – 24 July 2019
Independent Oil & Gas (IOG): Corp Gas reception facilities acquisition and Harvey update | Netcall (NET): Corp Trading update – building cloud revenue | Quartix (QTX): Corp Fleet performance underpins H1 | Sopheon (SPE): Corp Trading update: sunshine and Cloud | Synairgen (SNG): Corp COPD Phase II clinical trial update
SPE IOG NET QTX SNG
24 Jul 19
Small Cap Feast
Interswitch, a Nigeria-based payments firm, has hired advisers to resurrect plans for a stock-market listing in London and Lagos later this year, which may value the financial technology company at $1.3 billion to $1.5 billion. Voyager AIR The Company will focus on the acquisition, leasing and management of primarily widebody aircraft, with asset management services to be provided by Amedeo Limited the IPO will comprise a Placing and Offer for Subscription of Shares to raise up to approximately US$200m.Roxi Music UK music streaming service plans London IPO as it goes up against Spotify. They have appointed investment bank Arden Partners for an initial public offering (IPO) on the London Stock Exchange later this year.
SPE VLX VRS ARK CORA IMO DGOC HZD SNG EMR
24 Jul 19
AGM update detail
Sopheon continues to broaden its offering within enterprise clients, extending the applicability of Accolade outside its R&D stronghold, and towards the strategic direction-setting of entire organisations. Progress has been strong, and the good pipeline gives confidence that, although visibility of contracted orders is roughly flat on last year, the forecast sales growth should be delivered with the typical H1/H2 seasonality. We make no changes to estimates.
13 Jun 19
Morning Note – 13 June 2019
Evgen Pharma (EVG): Corp Full-year results – await SAH Phase IIb data | Iofina (IOF): Corp CBD oil licence approved | Sopheon (SPE): Corp AGM statement | Taptica (TAP): Corp Integration on track as Performance division struggles | Tekcapital (TEK): Corp Follow-on order for MicroSalt® | Zambeef (ZAM): Corp Performing despite unhelpful macro environment
SPE IOF TRMR ZAM TEK EVG
13 Jun 19
An excellent performance in FY 2018…
Sopheon has reported full year results in line with its January trading update and a little ahead of our estimates which we upgraded at that time. Sopheon saw a strong finish to 2018 with a number of transactions further underlining the adaptability and flexibility of the Accolade platform. Overall, Sopheon won 18 new customers compared to 13 in 2017. Chairman Barry Mence says that Sopheon has ‘a unique opportunity’ to build on its category leader status by accelerating investment. Revenue visibility is already at $20.6 million for FY 2019E and the announcement highlights a sales pipeline which includes a number of ‘large opportunities’. Management continues to look at acquisition opportunities to augment organic growth. After an excellent FY 2018 which has enabled Sopheon to increase its dividend by 30%, we note the Board’s intention to speed up investment during the year and we make changes to our FY 2019E estimates which leave Adj EBITDA a touch lower than our previous estimate. We introduce FY 2020E estimates which reflect a resumption of good growth in Adj EBITDA on the expectation of moderated investment spend.
21 Mar 19
Prelims – onwards and upwards
Sopheon has again delivered strong prelims, reporting EBITDA of $9.4m for FY18 from original estimates of $7.4m, having been upgraded at the end of 3Q18 (to $8.0m) as well as post year end (to $9.0m). The strong 4Q performance of previous years began to manifest in 3Q this year, with 4Q still providing strong momentum. The perpetual enterprise licence model continues to attract new customers, often delivered on a hosted basis, contributing to a growing base of recurring revenue at a $15m run rate including green shoots of demand for the SaaS version. Recruitment has proved a challenge, restraining costs to the benefit of EBITDA; however, the recruitment logjam now seems to have been solved into FY19 – this inward investment delivers a fillip to growth in maiden forecasts for FY20, with EBITDA growth of 17%. We lift our target price to 1500p (1400p), with a strong balance sheet ($16.7m net cash) offering all strategic options, including the 30% uplift in dividend from 2.5p per share in FY17 to 3.25p.
21 Mar 19
Small Cap Feast
Network International Holdings—Pleading enabler of digital commerce across the Middle East and Africa region, operating across over 50 highly underpenetrated payment markets that contain a total population of 1.5 bn. 2018 rev $298m, underlying EBITDA $152m. Due April. No new funds to be raised. Secondary sell down. Targeting 25% of at least 25%. Techniplas –global producer and support services company providing highly engineered and technically complex components, making the supply chain to original equipment manufacturers more efficient. FYDec17 rev $515m.
SPE BSE LPA KETL INSE FIPP SNX KIBO VRP ALBA
21 Mar 19
A strong finish to 2018
Sopheon’s brief trading update earlier in January stated that revenues for the year ended 31 December 2018 would be ‘comfortably in line’ with market expectations, with early indications that EBITDA and pretax profits would show stronger outperformance. Today’s announcement expects that reported revenues for the year ended 31 December 2018 will be over U$33 million compared to our estimate of U$31.6 million. With lower costs than planned, EBITDA and pre-tax profits are ‘significantly ahead’ of market expectations. Sopheon ended the year with net cash of around U$16.7 million – well ahead of our estimate of U$12.8 million. The announcement confirms a very active licence pipeline and highlights its ‘solid’ commercial profile in both the USA and EU, with rising interest from Asia through its partnership activity. In all, this has been a strong end to 2018 for Sopheon and there is significant momentum going into 2019. We adjust estimates to take account of this update with revenue estimates increasing by 4% for each of our forecast years. Adj EBITDA for FY 2018E increases by 14% to U$8.7 million while our equivalent number for FY 2019E remains unchanged to reflect the shift of some of Sopheon’s hiring programme into that financial year.
29 Jan 19
Solid finish to 2018
Sopheon has issued a brief trading update which says that revenues for the year ended 31 December 2018 will be ‘comfortably in line’ with market expectations which were upgraded following its Q3 2018 trading update. Early indications are that EBITDA and pre-tax profits will show stronger outperformance. Since its Q3 trading update, Sopheon has highlighted new contract wins with two multinational businesses. These, and previous contracts, further underline the benefits of the Accolade platform’s successful deployment in new areas as well as in its traditional sales arenas resulting in its adoption in an increasingly wide range of applications. With a more detailed update on the full year performance expected later in January, we leave our estimates unchanged for now but note the continuing positive momentum in the Group.
11 Jan 19
Morning Note – 11 January 2019
Altitude Group (ALT): Corp Taking AIM | ANGLE (AGL): Corp Parsortix used in breakthrough CTC cluster research | Lighthouse Group (LGT): Corp Stability amidst testing markets | NAHL (NAH): Corp Difficult Q4 | Sopheon (SPE): Corp Positive trading update
SPE ALT LGT AGL NAH
11 Jan 19
Revenue visibility improves further
The strong momentum seen in Sopheon’s first half has continued through Q3, with the Group announcing that revenue visibility now exceeds $30 million for 2018 – up from U$27.2 million at the time of the interim results. This reflects a record Q3 performance with a number of transactions, including the addition of two new contracts of material size - one with a new customer and one an extension with an existing customer – which were booked towards the end of the third quarter. The update notes that the sales pipeline for the balance of the year remains ‘robust’. Unsurprisingly, the Board says that it sees the strong performance as indicative of the growing maturity both of the Enterprise Innovation Management solutions market and of Sopheon’s reputation and business model. New customer wins in the first half of 2018 were some 50% ahead of those achieved in the comparator period and momentum has clearly continued. We increase estimates for revenue and Adjusted EBITDA by 5% and 8% respectively for FY 2018E and also nudge up FY 2019E to reflect the updated revenue visibility in the trading update. After an impressive performance so far in 2018 and with Q4 typically a key contributor of revenue performance, we look forward to further positive updates.
08 Oct 18
Contract evidences growing SaaS acceptance
Sopheon has received a contract from Doosan Bobcat North America to deploy its Accolade software to manage Doosan Bobcat’s portfolio of projects across a number of corporate groups. The implementation went live in August. In its recent interim results announcement, Sopheon noted that it had signed a number of Software-as-a-Service (SaaS) deals and extensions including a major new win. Our estimates already reflect that backdrop. Doosan Bobcat’s decision to go with a SaaS contract is another example of the growing acceptance of the SaaS model within the market for enterprise innovation management solutions. In the results announcement, Sopheon also said that it planned to make specific investment in product, people and processes to further extend Accolade. This will provide impetus to the Group’s focus on expanding its “lifetime value” opportunities across a number of blue chip clients through extending the business application areas addressed by Accolade. It recently released Accolade version 12.1. Sopheon produced a strong performance in the first half of 2018 and the Group retains both good momentum and excellent revenue visibility. We look forward to further updates.
10 Sep 18
Strong first half performance
In line with its July trading update, Sopheon has reported a strong first half performance with revenue, EBITDA and profit before tax well ahead of H1 2017 and representing over half of our respective FY 2018E numbers. Impetus from good growth during 2017 was augmented by new customer wins in the first half of 2018 which were some 50% ahead of those achieved in the comparator period. Sopheon has also continued to expand its “lifetime value” opportunities across a number of blue chip clients through extending the business application areas addressed by Accolade. In a rapidly evolving market, the group has strategic plans to extend Accolade further with specific investment planned in product, people and processes. With good revenue visibility and positive sales experience so far in the second half, the Board has reiterated that Sopheon is trading ‘comfortably in line’ with expectations. These results underpin our full year estimates and we note the strong momentum in the business. With Q4 typically a key contributor of revenue performance, coupled with the potential effect on costs of ambitious hiring plans for the second half of 2018, we leave estimates unchanged for now and look forward to further positive updates as the year progresses.
23 Aug 18
Interims set the pace for another good year
Interims to June confirm continuing strong performance identified at the July trading update, achieving 51% of forecast FY revenue (1H17: 44%) and 58% of FY EBITDA (1H17: 38%), with visibility over FY contracted revenue already at 88% of full-year expectations (71% this time last year). Net cash is very strong at $15.5m, with 84% of FY free cash flow expectations achieved through the unwind of a build-up in 4Q17 working capital typical of a model which remains dominated by perpetual licences. Forecasts are unchanged and de-risked, leading us to review our target price to 1,295p (1,000p), equivalent to an FY19 EV/EBITDA of 17.5x.
23 Aug 18
Buoyant first half trading
Sopheon’s trading update for the first half of its current financial year says that it expects revenue, EBITDA and profit before tax for the first half of 2018 to be ‘significantly ahead of prior year performance for the corresponding period’. In addition, with positive sales experience so far in the second half, the Board says that it is trading ‘comfortably in line’ with expectations. To us, that continues to reflect Sopheon’s success in adding new clients and improving revenue visibility through growing recurring revenue streams. We note that this unequivocally positive trading update is supportive of our estimates and will look at them in light of the detail of August’s interim results announcement.
19 Jul 18
Small Cap Breakfast
CentralNic-Schedule 1 from the business operating in proprietary retail platforms selling domain names and associated web presence services including hosting and email on a subscription basis, has acquired KeyDrive S.A which constitutes a RTO. Raising £24m at 52p, combined market cap of £88.7m Trackwise—established business that manufactures specialist products using printed circuit technology. Offer TBA. Due Late July Ovoca Gold (to be renamed Ovoca Bio PLC) - RTO of IVIX, a Russian company developing a drug candidate for the treatment of female sexual dysfunctions. No monies to be raised, market cap of £8.5m, due 30 July Nucleus Financial—independent wrap platform provider . FYDec17 revs £40.36m and PBT of £5.1m. Offer TBA. Due late July. Kropz PLC-Intention to float by the emerging plant nutrient producer with an advanced stage phosphate mining project in South Africa and exploration assets in West Africa
SPE HUM ZOE AO/ CAR GSH TAX LID BHRD AMYT
19 Jul 18
AGM statement notes continued momentum
Sopheon’s AGM statement highlights trading so far in 2018 which reflects the continuation of the strong performance seen in 2017 into the current year. The company also completed an oversubscribed secondary placing in May which broadened its institutional shareholder base. Sopheon continues to add new clients and to improve revenue visibility through growing recurring revenue streams. The announcement reiterates that the Group will consider suitable acquisitions to augment its good organic growth. The outlook statement is, unsurprisingly, positive with the Board both ‘confident’ and ‘enthusiastic’ about the outturn for 2018 and delivery on its strategy. We have already taken account of the Group’s ‘ambitious’ investment plans in our conservative Adjusted EBITDA estimate of U$7 million for FY 2018E. Consequently, we leave estimates unchanged, noting that trading so far in 2018 appears supportive of our numbers.
07 Jun 18
Sopheon has delivered a very strong 2017 – in line with the previous trading updates, and benefiting from a very good end to the year. The group is ahead of our estimates on all metrics, and is well placed going into 2018 and beyond. Management have signalled their confidence with the welcome introduction of a maiden dividend (2.5p). We upgrade our estimates for both 2018 and 2019.
22 Mar 18
Strong momentum continues
Strong momentum continues, with a checklist of positive catalysts into FY18 and FY19: repeat outperformance; reinstated forecasts, having been upgraded since being suspended at the time of the trading update in December; product excellence leading to global large enterprise adoption; regular product updates and functionality improvements to keep existing customers enthused and potential customers even more interested; a focus on distribution partners to further boost sales; and the financial strength and confidence in balance sheet to accelerate inward investment – while also instating a maiden dividend, showing a commitment to cash management, shareholder returns, and the broadening the potential investor base. Having delivered 23% organic revenue growth, and 53% EBITDA growth, management has taken the decision to invest for growth, accelerating the expansion of sales and marketing and R&D in order to create the platform to deliver accelerating growth. The stars are aligned and visibility is at record levels, with 62% of FY18 revenue (FY17: 51%) already contracted: we lift our 12-month target to 1000p (620p), Sopheon having shown the evolved maturity to merit a fuller enterprise software multiple of a target 17x FY18 EBITDA.
22 Mar 18
Avesoro Resources (ASO): Corp High grade intersections from infill drilling at New Liberty | Cambridge Cognition (COG): Corp FY results – R&D will drive value | Cello (CLL): Corp Core global brand leveraging digital expertise into health | CityFibre (CITY): Corp Third FTTH City - Peterborough | Quixant (QXT): Corp Place your bet on this ecosystem | Sopheon (SPE): Corp Strong momentum continues | Utilitywise (UTW): Corp Focus on the cash flow
SPE ASO COG CLL CITY QXT UTW
22 Mar 18
Significantly ahead of expectations
In today’s more detailed trading update, Sopheon has confirmed its brief statement in early January that revenue and profit for FY 2017E will exceed market expectations. As well as providing an anticipated revenue figure above U$28 million, it states that both EBITDA and pretax profits will be ‘significantly ahead of current market expectations.’ Today’s update notes that volume of transactions increased with a greater number of license deals and new SaaS customers – and Q4 contained two substantial deals. Sopheon ended 2017 with net cash of U$9.5 million. The group has a higher recurring revenue base and greater revenue visibility overall. We adjust FY 2017E numbers to reflect the guidance given today, driving a 31% increase in our Adjusted EBITDA estimate to U$6.9 million. We also adjust estimates for December’s conversion of loan stock and that is the only influence on our estimates for subsequent years where we retain a conservative stance and note future investment in the Accolade platform. We will look to revisit those estimates when further detail is available at the time of the results announcement.
29 Jan 18
Trading update and customer event feedback
Sopheon has today published an upbeat trading update. We make no changes to estimates at this stage, but will look to revisit forecasts once more detail is available. Separately, we had the privilege of attending a recent Sopheon user forum in Stuttgart. The event provided a rare insight into the Group’s relationships with customers, and gave us a significant degree of reassurance around the product’s reach, the roadmap, and the level of reliance placed upon it by a global group of blue chip clients.
04 Jan 18
Small Cap Breakfast
Cradle Arc—holding company of a group of companies focused on the exploration and development of precious and base metals projects in Africa. Offer raising £2.4m with market cap of £20.25m. Expected 10 Jan 2018 | Volex VLX.L—The global provider of cable assemblies is proposing to move from the main market to AIM on 19 January. £75m market cap. FYMar18E rev £241.5m and £7.19m PBT | OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m.
SPE FUM WGB SYM CHH SRE CYAN SDX
04 Jan 18
The Joy of Techs
This quarter we use finnCap’s Slide Rule to provide both top-down and bottom-up analysis of the UK’s Technology and Telecoms sectors. Our findings are very reassuring: the Tech sector scores the best (across all sectors) when considering Growth and Quality – Taptica*, Frontier Developments* and dotDigital* in particular stand out on these metrics. Given these attractive characteristics and growth prospects, the Tech sector is unsurprisingly one of the most expensive – currently trading at 17.2x FY1 EV/EBIT and 23.8x FY1 P/E, versus 15.0x and 18.5x respectively for the wider market. Despite valuations appearing high, we believe there are value opportunities. For example, Proactis* features in finnCap’s QVGM+ portfolio (ranked 17/462) – the company offers attractive organic and inorganic growth, with earnings forecast to grow by 26% CAGR over the next two years, but despite this, only trades on 15x FY1 earnings and offers 8% FCF yield in FY2.
SPE 7DIG ALT AMO ARTA BOTB BLTG CTP CITY D4T4 DTC DOTD ELCO FDEV GBG IDEA IDOX IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET PHD QTX QXT RCN 932 SEE SIM SRT STR TRMR TAX TEP TPOP TRAK UNG VIP ZOO CYAN ONEV SSY ABAL WJA
09 Nov 17
Small Cap Breakfast
Clean Invest Africa—Introduction due around 14 Nov. Vehicle established to identify investment opportunities and acquisitions in renewable and clean energy projects/companies or alternative technologies that are used in a socially and environmentally responsible way that will aid the development of the African continent. | City Pub Group - owner and operator of an estate of 34 premium pubs across Southern England. £30m raise. Consistent track record of strong revenue and EBITDA growth, with a three year CAGR from FY14 to FY16 of 34.9% and 44.8% respectively, and an EBITDA margin of 14.7% in FY16. Due Nov. | Boku - Independent direct carrier billing company. Revenues were up 21% to US$10.2 in HYJun17. Q32017, revenues grew to $6.5m, up by 44%. The Company also saw continued growth across all of its key metrics: user numbers, total payment and a positive adjusted EBITDA for the month of September 2017. Due 20 Nov. Offer TBA. | Ten Lifestyle Hldgs. Technology-enabled lifestyle and travel platform providing trusted concierge services to the world's wealthy. Net revenue increased from £20m in the year ended 31 August 2015 to £33m in the year ended 31 August 2017, a compound annual growth rate of 29%. Offer and date TBA. | OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. | OG Graphite, brownfield development-stage graphite company focused on the reactivation of its wholly-owned Kearney natural flake graphite mine and mill located 280 km north of Toronto, Canada. Offer TBA, expected mid November. | Shefa Yamin minerals company focused on the exploration for precious stones in Northern Israel. Net Proceeds will be used to advance the Company's mining project. Offer TBA. | Aviva Investors Secure Income REIT - Targeting £200m raise. Will invest in a diversified portfolio of high quality, long-lease commercial real estate assets located within the UK and leased to predominantly investment grade tenants. Due Dec. | Cabot Credit Management -one of the largest credit management services providers in Europe and the market leader in the UK and Ireland with total 120-Month ERC of £2.2bn. Raising c.£195m. Offer TBA. Due November. | M7 Multi-Let REIT—Intends to raise up to £300m at 100p. Aims to acquire and hold a portfolio of UK regional light industrial and regional office assets diversified by geography, asset type and tenants that is expected to generate stable income returns and, where appropriate, offer the potential to leverage and enhance returns through active asset management initiatives. Due 30 Nov. | En+, international vertically integrated aluminium and power producer with core assets located in Russia. Priced at $14 per GDR. $1.5bn offer of which $0.5bn primary to pay down debt. Dual listing in Moscow. Unconditional dealings 8 Nov. | TMF Group, which provides tax, admin and legal support services, reported to be seeking London IPO to raise c. £200m.
SPE AURA ITM ONC CITY GRL BAR HSM RTHM ROSE
09 Nov 17
Transense Technologies* (TRT): Full-year results – at a turning point in commercial traction (CORP) | Altitude Group* (ALT): Interims on track, opportunity grows (CORP) | Universe Group* (UNG): All to play for (CORP) | Minds + Machines* (MMX): Fruits of labour (CORP) | Taptica* (TAP): 47% YoY H1 earnings growth with cash to match (CORP) | Netcall* (NET): Consistency and opportunity (CORP) | Castleton Technology* (CTP): Delivery of milestone contracts (CORP) | Sopheon* (SPE): Industry recognition (CORP) | 7digital* (7DIG): Interims (CORP) | Mortgage Advice Bureau (MBA1): Building IP (HOLD)
SPE ALT UNG MMX TRMR NET CTP 7DIG MAB1 TRT
26 Sep 17
Investment bearing fruit
Sopheon has reported good interim results with revenues just below half of our full year estimate and adjusted EBITDA just above. The announcement highlights a growing sales pipeline and good revenue visibility for the full year. Higher first half licence revenue was spread across a broad customer profile while maintenance and hosting revenues also increased. Annualised recurring revenues (ARR) improved to U$10.5 million at the end of H1. The outlook statement is positive and the Group says that it is considering the introduction of a formal dividend policy. We note the positive momentum in the business with a broad range of customers adopting Accolade for an increasingly wide range of applications. Although we leave estimates unchanged for now, the balance of risk appears to be on the upside, and we see the results as a clear and positive step in the right direction. We will revert with further analysis on the back of the company’s upcoming customer event.
24 Aug 17
Interims: value and growth opportunity
Interims are in line with expectations and the strong performance track record evident since 2015. 9% revenue growth (all organic) was strong even compared with a strong 1H16, which had been boosted by a notably large deal. 28 licence orders (1H16: 20) indicated strength in a greater volume of more typically sized licence sales as well as associated maintenance and services, with regular deals de-risking reliance upon delivery of particular contracts. Demand for Enterprise Innovation Management software and solutions is growing, with awareness amongst potential customers leading to increased activity. With visibility of FY revenue expectations at 78%E (FY16: 79%A; FY15: 72%A), underlying board confidence in continuing growth (revenue and profit and cash) is further expressed through consideration of a prospective dividend policy. We reiterate our 620p target price, still only equating to 9x FY17 EV/EBITDA, en route to a peer group multiple of potentially twice that.
24 Aug 17
Small Cap Breakfast
appScatter Group—Sch1 from the B2BSaaS platform that allows its paying users to distribute their apps to, and manage their apps on, multiple app stores. Following admission, appScatter intends to launch the public version of the platform, at which point the platform will be available to all app developers and publishers worldwide. Offer TBC, expected early Sept 2017 | Warehouse REIT - The Company will invest in a diversified portfolio of UK warehouse assets located in urban areas. The Company is targeting a dividend yield of 5.5p equivalent to a yield of 5.5 per cent. for the year ending 31 March 2019. Issue price 100p. Raising up to £150m. | Destiny Pharma—A clinical stage biotechnology company - lead asset (XF-73) targets antibiotic-resistant bacterial infections in hospitals. Offer TBA. Due early September. | Avingtrans (AVG.L) Sch1 on its Reverse Takeover of Hayward Tyler (HAYT). Combined market cap of c.£75m. Expected 01 September 2017 | OnTheMarket—Intention to float on AIM to raise c. £50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. | Chesterfield Resources-newly established company formed for the purpose of acquiring a company, business or asset that has operations in the mining sector that it will then look to develop and expand. Raising £1.3m at 5p. Due 29 Aug. Mkt cap £1.4m. | Hipgnosis Songs Fund investment Company offering pure-play exposure to Songs and associated musical intellectual property rights. Offer raising £200m at 100p. The Company has decided to extend the closing date for the Placing, Offer for Subscription and Intermediaries Offer to 1 August 2017. The Company may bring forward this closing date at any time. Admission 15 September 2017
SPE PVCS PHE AGQ 88E CPP SDI SKIN SKIN BRD
24 Aug 17
Small Cap Breakfast
AnimalCare—RTO of Ecuphar NV, a European animal health company. £30m raise. Ecuphar FY16 rev £68.4m, underlying EBITDA £8.9m. Due 13 July. | Angling Direct -Schedule 1 from the specialist fishing tackle retailer in the UK . Offer TBA. Expected mid July. | NEXUS Infrastructure—Offer TBA. Provider of essential infrastructure services to the UK housebuilding and commercial sectors. Expected 11 July. FYSep16 rev £135.7m. | Tatton Asset Management –Sch 1. Provider if services to FCA authorized financial advisers. Raising £10m at 156p. Secondary offer £41.6m. Due 6 July. | GYG—Intention to float by the superyacht painting, supply and maintenance company. Due 5 July. Raising £6.9m new plus vendor sale of £21.5m at 100p. Mkt Cap c. £47m. Revenue of €54.6m in FY16 and adjusted EBITDA of €6.7m. | Greencoat Renewables - Schedule 1. Targeting a portfolio of operating renewable electricity generation assets, initially investing in wind generation assets in Ireland. Offer TBC. Due Mid July. | FFI Holdings— Specialist in the provision of completion contracts to the entertainment industry for films, television, mini-series and streaming product. Raising £59m at 150p. Expected 30 June.| QUIZ— Omni-channel fast fashion womenswear Company intention to float. Due July 2017. Offer TBA | I3 Energy –Schedule 1. Independent oil and gas company with assets and operations in the UK. Offer TBC, 7 June admission. | Verditek— Sch 1 update. The Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission late June | Rockpool Acquisitions—Northern Ireland based Company seeking strong NI acquisition with an international outlook. Raising £1.5m at 10p. Due 5 July. | Hipgnosis Songs Fund investment company offering pure-play exposure to Songs and associated musical intellectual property rights. Prospectus yet to be published. | Impact Investment Trust—Exposure to a diversified portfolio of funds providing SMEs across developing economies with the growth capital they need to have a positive impact on the lives of the world's poorer populations. Raising up to $150m at $1.00 Residential Secure Income - social housing REIT raising up to £300m Admission due c.12 July. | Curzon Energy—Report on Proactive Investors of intended LSE float this year with acquisition of coal bed methane assets in Oregon. Looking to raise £3m plus. | NLB Group—financial and banking institution based in Slovenia, with a network of 356 branches. Seeking Ljubliana Stock Exchange listing with GDRs on the LSE. Expected mid June. | Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe |Supermarket Income REIT– Up to £200m raise to acquire a diversified portfolio of supermarket real estate assets in the UK, providing long-term RPI-linked income. Due 21 July.
SPE WSG VNET ZIOC OPP MLVN CHRT AFC RENE HCM
29 Jun 17
Confidence in ‘continued positive development’
Sopheon’s AGM statement notes that, during 2017, it has continued to advance its Accolade software platform, launching version 11.1 in February. The Group has recently been included in Gartner’s Magic Quadrant for Project Portfolio Management, a strong validation of its unique position in the enterprise portfolio management, enterprise initiative management, and product development markets. Full year revenue visibility is up, despite a robust prior year comparator. That combines with a strong pipeline to produce a confident statement from the Board on future delivery. We expect that the benefits of Sopheon’s products will continue to drive customer wins as the requirement to manage innovation becomes more fully recognised.
08 Jun 17
Small Cap Breakfast
Touchstone Exploration— Oil exploration and production company active in the Republic of Trinidad and Tobago. Interests of approximately 90,000 gross acres. Production c. 1,300 boepd. Raising £1.45m. Expected mkt cap £7.5m. Due 26 June. | I3 Energy –Schedule 1. Independent oil and gas company with assets and operations in the UK. Offer TBC, 7 June admission. | Verditek— Schedule 1 update. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission in Early June | Tiso Blackstar Group—Schedule 1 update. Media, entertainment and marketing solutions group/ £160m mkt cap. Admission only. Expected late June. | ScotGems—Admission due 26 June. Seeking £50-£100m. To investing in a diversified portfolio of Small Cap Companies listed on global stock markets | DP Eurasia—Intention to float from the exclusive master franchisee of the Domino's Pizza brand in Turkey, Russia, Azerbaijan and Georgia. £20m primary raise plus a partial vendor sale. | Film Finances—Sky News reports that ‘movie financing company with credits including the Hollywood hits La La Land and Nocturnal Animals is plotting a blockbuster premiere on the London stock market that will value it at several hundred million pounds.’ Expected ‘during the summer’. | AIB—Intention to float from AIB, Ireland's leading retail and commercial bank . The Minister for Finance intends to sell approximately 25% of the Ordinary Shares of AIB. Prospectus and announcement of the price range due in mid-June 2017. | Curzon Energy—Report on Proactive Investors of intended LSE float this year with acquisition of coal bed methane assets in Oregon. Looking to raise £3m plus. | NLB Group—financial and banking institution based in Slovenia, with a network of 356 branches. Seeking Ljubliana Stock Exchange listing with GDRs on the LSE. Expected mid June. | Flying Brands (FBDU.L)—Prospectus approved by FCA. RTO of Stone Checker Software, supplier of technology solutions in the field of kidney stone analysis and prevention. Has raised £550k at 3p. Subject to GM on 15 Jun. | AEW UK Long Lease REIT—Intention to Float. Up to £150m raise. Admission early June. UK specialist and alternative property | Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe
SPE GBP CLON BOTB MPAC PTCM CRU TRB SSY CAB
08 Jun 17
The Joy of Techs
Enterprise-focused niche applications of tech illustrate how, while trends appear to be fluctuating away from the current poster children of fintech and the Internet of Things, in fact these developments are refining appropriate application of existing technologies.
SPE 7DIG AMO ARTA BVC BOTB CTP CITY D4T4 DTC DOTD ELCO FDSA FDEV GBG IDEA IDOX IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET PHD QTX QXT RCN 932 SEE SIM TAX TEP TPOP TRAK UNG VIP ZOO ONEV SSY ABAL WJA
27 Mar 17
Or, helping a juggernaut turn on a dime
Sopheon has spent many years evolving a state-of-the-art platform allowing Enterprise customers to manage and monitor their pipelines of innovation. As this market matures and on the back of some major reference client wins, Sopheon’s Accolade product is beginning to see material success on a number of fronts. This note describes the marketplace, the technology, and the progress now being achieved.
24 Mar 17
Stronger and stronger
Sopheon has reported strong prelims in line with the January trading update which had demonstrated that revenue delivery had been achieved on cost underspend, leading to EBITDA (+7% vs FY16E) and adjusted PBT (+22%) outperformance. Strong licence sales, high levels of recurring revenue retention (94% by value), and ever upgrading product portfolio in terms of functionality delivered revenue strength. Gartner recognition illustrates the transition from a product which needed to be described then sold, to a solution set sought by customers to deal with the increasingly acknowledged enterprise problem of efficient product lifecycle management. Sopheon is well positioned for future growth, and board confidence for future growth leads to planned increase in investment, yet still delivering $5.6m ($5.3m pre FX) EBITDA. Having smashed through our FY16 forecasts and target price, we restore FY17 forecasts and lift the 12-month target from 360p to 620p.
23 Mar 17
The Mission Marketing Group* (TMMG): Valuation anomaly (CORP) | Ithaca Energy (IAE): FY 2016 results (HOLD) | Sopheon* (SPE): Stronger and stronger (CORP) | Shanta Gold (SHG): New mine plan for New Luika (BUY) | Ideagen* (IDEA): Acquisition and placing (CORP)
SPE TMG IAE SHG IDEA
23 Mar 17
Joy of Techs
ICT evolution is driven by technological development as advances are made which both meet and shape customer requirements. Our 2011 note No such thing as a telco described the modern reality in that former ‘telcos’ now deliver varying elements of a range of managed services. We built on this theme last year, exploring in further detail their evolutionary paths, operating fundamentals, and cashflow yield similarities. In the consumer environment, demand for bundles of technology is complemented by demand for content. Across the pond, the mooted combination of AT&T and Time Warner typifies the bundled need of ‘pipe’ and content, since unbundled alternatives such as FaceTime and WhatsApp can be easier and clearer to chat over, and Amazon and Netflix are easier to watch anywhere. In the UK, BT’s defensive actions cover delivery, content and capabilities, acquiring EE yet also buying football rights. While TV was long ago added to triple play to become quad play, voice is now merely an app, and fixed and mobile seen as just dumb pipes: it's the content that will influence consumer choices. Growth of TV and film as well as music and gaming over IP leads to UK small cap opportunities. In context of the drive to maximise value from pipes and access by offering content and data, we look at some amongst the potential tech small cap beneficiaries: Amino*, Keyword Studios, ZOO Digital*, 7digital*, KCOM* and CityFibre*.
SPE 7DIG AMO ARTA BVC BOTB CTP CITY D4T4 DTC DOTD EGS ELCO FDSA FDEV GBG IDEA IDOX IMG IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET PHD QTX QXT RCN 932 SEE SIM TAX TEP TPOP TRAK UNG VIP WAND ZOO ARC ONEV SSY ABAL WJA
21 Nov 16
Positive momentum thunders on
Interims to June continue the very strong momentum demonstrated over the past 12 months. The strategic migration from product to solution, combined with an operational focus on sales, and a development focus on regular client-led updates, has resulted in both revenue growth (+37%) and margin improvement (EBITDA from 12% to 25%). Visibility remains very strong, extending to 80% of the FY16 revenue forecast. After upgrades in March 2016 with prelims, interims have led us to review and further improve forecasts, with FY16 EBITDA upgraded 13% (FY17: +4%), even with the expected growth in opex in 2H16. Target price lifted to 360p (150p), with the hoped for momentum evident, and even surpassed.
25 Aug 16
The Joy of Techs
Mobile money has been slow to deliver but investors need to stay engaged as there are plenty of reasons as there are plenty of reasons for success. Mobile penetration and network coverage are growing inexorably and where communication leads, transactions follow, as e-commerce has proven. Banking and payments lead the way but it will embrace other financial services too, from insurance to cross-border remittance. Slowly but surely, mobile money is coming of age.
SPE 7DIG AN AMO ARTA BVC BOTB CTP CITY D4T4 DTC DOTD EGS ELCO FDSA FDEV GBG IDEA IDOX IMG IGP IOM KBT KCOM KWS LRM MAI NASA NET PHD QTX QXT RCN 932 SEE SIM TAX TEP TPOP TRAK UNG VIP WAND ZOO ARC ONEV SSY ABAL WJA
15 Aug 16
The Joy of Techs
This quarter's topic: Feasting on Red Tape. 2016 harbours every chance of being a stultifying year, given the imminent local and London mayoral elections, the looming hurdle of Brexit, the summer doldrums, the bizarre potential outcome of the US presidential election and then the home strait to Christmas. Excuses for inactivity abound with regard to spending IT capex budgets.
SPE 7DIG AN AMO ARTA BVC CTP CITY DTC DOTD EGS ELCO FDSA FDEV GBG IDEA IDOX IGP IOM D4T4 KBT KCOM KWS MAI NASA NET PHD QTX QXT RCN 932 SEE SIM TEP TPOP TRAK UNG WAND ZOO ARC ONEV SSY
04 May 16
Strong 2015 performance
As heralded at the trading update, Sopheon has delivered very strong results: detail is now revealed in the full-year results, including revenue 4% ahead of expectations and EBITDA 44% ahead. The total of 42 transactions in the period included 14 new customers and 28 transactions with existing customers; however, at a higher revenue per transaction, this resulted in a 31% outperformance in licence revenue versus our expectations. With momentum evident in the intense customer activity in the year, the sales transition from a product business to an enterprise solution business – with a resultant growing base of maintenance and service revenue – is proving fruitful. We lift our target price to 150p (100p), equivalent to only 11.9x FY16 P/E and 3.5x EV/EBITDA, en route to a fuller market valuation as the company continues to deliver proof points
17 Mar 16
The Joy of Techs
This quarter’s topic: Automotive Technology. With the Mobile World Congress approaching at the end of this month and likely to feature so many automotive applications to the extent it should perhaps be renamed the Mobile World of Cars, we examine the growing impact of technology in the automotive industry, from telematics to connected cars and autonomous vehicles.
SPE 7DIG AN AMO ARTA BVC CITY CNS DTC DOTD EGS ELCO FDSA FDEV GBG IDEA IDOX IGP IOM D4T4 KBT KCOM KWS MAI NASA NET PHD QTX QXT RCN 932 SEE SIM TEP TPOP TRAK UNG WAND ZOO ARC CTP SSY
03 Feb 16
Sopheon has reported interims in line with the AGM statement and trading update of 10 June: as heralded, FY15 is expected to be significantly (58%) second half weighted, with current visibility of contracted revenue for FY15 at $15m. Activity remains intense, with new customers, extended existing customer relationships, and product releases. Target 100p reiterated as a staging point in share price development, en route to a much higher 200p+ fair value which has the potential for delivery with management’s proof of execution.
27 Aug 15