ZOO Digital is one of the companies whose business models have stood it in good stead during the COVID-19 pandemic; its cloud-based platform has proved to be a key attribute over the last six months. Indeed, the changed working practices within the dubbing industry have helped to educate more potential users about the benefits of remote operating and the quality of performance that can be achieved when using the ZOOdubs platform. In our view, ZOO’s Capital Markets Day (CMD) presentations - a recording is available here - achieved a rare combination of being both informative and clear as to those operational benefits and the financial implications (a roadmap to U$100m of revenue) for the Group within an evolving market. We highlight some of the main messages from the speakers – from outside the company in several cases – which covered the market for localisation services, the use and benefits of ZOO’s platform and the technology behind the service.
Companies: ZOO Digital Group Plc
ZOO has provided a short trading update to accompany its AGM which will be held later today. The business is performing well…double-digit revenue growth y/y across H1 is clearly a strong result given the market disruption, and is tracking very well towards our full-year figure. We make no changes to estimates (which we reinstated in July) but will consider revisiting them at the time of the H1 results in early November.
FY20 results Revenue was roughly flat on the prior year ($29.8m vs $28.8m) but the Adjusted EBITDA result was $2.1m compared to the 2019 outcome of $0.4m – a material improvement, driven by a higher mix of strong gross margin sales and also benefiting to the tune of c.$1m from the adoption of IFRS16. Net cash (pre the convertible loan) was some $0.7m, impacted by a new divisional relationship with an existing customer leading to some payment delays – the RNS explains that this abnormal working capital position has now “unwound” post the year-end.
Trading update confirms FY'20 trajectory
In a short trading update, ZOO states that trading in the first weeks of the 2021 financial year has been ‘encouraging’ with a ‘reassuring resumption in demand’. The group has also reiterated guidance given in its previous update in March for the financial year to 31 March 2020, for revenue and EBITDA of approximately $30m and not less than $2.2m respectively. Cash collection was much stronger than forecast and therefore cash at the yearend was $0.7m. We adjust our FY 2020E net debt expectations accordingly.
The Coronavirus pandemic is a human tragedy of vast proportions – as well as the terrible human toll, COVID-19 has led to economies across the globe going into physical lockdown and financial freefall. Entire populations are adapting to the “stay at home” edict, to safeguard the vulnerable – and some of these changes will lead to long-lasting or perhaps permanent changes in the way we live or work. This note describes some of our client companies whose business models are well adapted to these changes, or who might see a change in long-term structural demand.
Companies: AMO BGO FDM GAMA KAPE LOOP TERN ZOO
ZOO’s FY20 update suggests an element of delay in various projects towards the end of the year as Covid-19 has slowed customers’ projects. Revenue is now expected to be shy of our previous forecasts, at around $30m. EBITDA was also impacted, but to a lower extent, presumably on the basis of prudence in the estimates, and is likely to reach some $2.2m against our $3.6m estimate. We choose to withdraw our 2021 estimates, on the basis of the current confusion around Coronavirus impact, despite the group’s clear ongoing and building traction in its end markets.
Netflix to slash Europe traffic; IBM & White House deploy supercomputer
Pre-close trading update for FY20
Sensitising potential delays in filming
WeWork continues to divest, Amazon music hits 55m subscribers, Google and Apple clash over privacy
Disney+ hits 22m mobile users, SoftBank backed firm downsizes IPO, German mobile carrier selects Huawei
Companies: ENET 7DIG MVR ZOO ZOO AMO BOOM MIRA MWE
TikTok owner Beijing ByteDance Technology is in talks with big music labels - Universal Music, Sony Music and Warner Music - for global licensing deals to include their songs on its new music subscription service, the Financial Times reported on Sunday. ByteDance is looking to launch its music streaming as soon as next month, initially in emerging markets such as India, Indonesia and Brazil, before a future opening in the United States, the FT reported, citing people familiar with the matter. HP's board of directors said Sunday that they unanimously rejected a proposal from Xerox to acquire the company, because the offer is not in the best interest of shareholders and would undervalue HP. Xerox had offered HP $22 per share in its takeover bid for the company. HP is worth $29 billion and is over three times the size of Xerox, which makes printers and copiers, in terms of market cap. Japan's SoftBank plans to merge internet unit Yahoo Japan with messaging app operator Line Corp to create a $30 billion tech giant, as it bags struggling internet companies to bulk up against rivals like Rakuten Inc. The telco in a statement said Yahoo Japan, which last month changed its name to Z Holdings Corp, will merge with Line, owned by South Korea's Naver Corp, in a deal to be completed in October 2020. The companies aim for a definitive agreement by next month in a transaction that will see SoftBank Corp and Naver form a 50:50 venture that will control Z Holdings, which will in turn operate Yahoo Japan and Line.
Companies: 7DIG MVR ZOO AMO MIRA
MTI Wireless Edge Ltd* (MWE.L, 34p/£29.7m) | ZOO Digital plc* (ZOO.L, 84p/£62.6m)
Companies: MTI Wireless Edge Ltd. ZOO Digital Group Plc
Dropbox shares bounced around after the company reported betterthan-expected third-quarter earnings on Thursday, as investors digested the company's improvements on some key metrics but widening GAAP losses from a year ago. Earnings excluding certain items came in at, 13 cents per share, vs. 11 cents per share as expected by analysts, according to Refinitiv.
Companies: 7DIG ZOO AMO ESYS KNOS MIRA
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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.
Companies: LoopUp Group plc
Covid has accelerated the digitisation of all things physical. No more so than in the €10 trillion global construction industry, which some experts reckon has 5 years of catching up to do. A non-insignificant task (eg Crossrail & HS2) that could take decades to play out, but equally realise 100s of £bns of cost, time & productivity savings annually. The €8bn BuildTech sector (10%+ CAGR – see below) is at the heart of this transformation. Providing the glue & ‘digital twins’ that bind all the inter-connected ‘property lifecycle’ parts together – eg CAD/CAM (design), project mgt, visualisation, AI, asset maintenance (operate) and BIM (Building Info Modelling).
Companies: Eleco Plc
As flagged in the July trading update, the Eleco group (formerly Elecosoft) has delivered impressive first half financials in the face of the global pandemic. However, the results are somewhat overshadowed by the retirement of Executive Chairman, John Ketteley, after 23 years in the role. The COO, Jonathan Hunter, takes over as CEO and the Deputy Chairman, Serena Lang, steps up to Chairman. Both are very experienced and offer safe hands to guide Eleco forward through the unprecedented conditions of COVID-19. In the early stages of the pandemic, the group demonstrated its resilience as H1 revenue slipped just 4% YoY with 57% revenue being recurring. Moreover, benefiting from reduced cost of travel and marketing, H1 adj. PBT rose 12% YoY to £2.2m. The profit uplift was matched by strong cashflow, improving net cash from £1.1m at YE to a very healthy £4.4m at the end of June. Forecasts remain under review due to uncertainty in the COVID-19 environment, but Eleco continues to be well positioned – not just to weather the storm of pandemic, but to deliver a strong financial performance across the full year.
Given that Pelatro has visibility of over $5m of revenue for FY20E, we are leaving our forecasts unchanged following the interim results. The pipeline is strong and we are cognisant that the mix of business signed in H2E will have a proportionate impact on reported performance this year. Pelatro is trading at the lower end of its 12-month price range which creates a buying opportunity.
Companies: Pelatro Plc
Ideagen is a leading supplier of information management software, specialising in Integrated Risk Management (IRM) solutions to highly regulated industries. Consistently recognised in the Gartner Magic Quadrant since 2016 for its solution set, Ideagen has developed a best-of-breed IRM suite through a blend of internally driven R&D and strategic acquisitions, earning the group significant presence in its core markets. Our mantra remains that the three certainties in life are death, taxes and regulatory compliance – Ideagen is positioned to grow from strength to strength, as organisations worldwide are faced with increasingly demanding regulatory standards, and the requirement to provide a referenceable trail of accountability. As the group embarks on its twelfth consecutive year of growth, coupled with the potential upside of inevitable acquisitions, we believe Ideagen is poised for ongoing acceleration into the coming years.
Companies: Ideagen Plc
Interim revenue to June is in line with 1H19 including the benefit of Celtech (acquired April 2019). Recurring data services revenue grew 19.9%, while elements of implementation suffered from COVID-19: Services and Installation -4% and Consultancy & Maintenance -10%. A focus on cost control resulted in furloughed staff (now returned to work) from a larger cost base than 1H19 after the Celtech integration, and some August redundancies in areas where customer activity has reduced and will likely stay low. Nevertheless, the group won significant business in the period from several major customers as a well as a new Outdoor Payment Terminal contract. A pipeline of £12.5m for 2H20 offers typical 2H strength for the group, derived from recurring revenue and the visible order book, subject to obvious concerns about the ability to implement projects. Net cash (excl. IFRS16) of £1.6m includes gross cash of £4.1m and gross bank debt of £2.5m, with £1.5m headroom in the undrawn April 2023 bank facility.
Companies: Universe Group Plc
LoopUp recently unveiled a major extension to its ambitions – the group is aiming to become a leading global provider of telephony “inside” Microsoft’s Teams product. The opportunity is clear and growing, as enterprise customers look to use Teams for “normal” external phone calls, and LoopUp seems well placed to deliver a differentiated offering using its existing infrastructure and knowhow. In this document we provide an overview of the new platform and explain its strategic significance.
Instem has delivered strong H1 20A results in our view. Despite the backdrop of COVID-19, all three business areas continue to perform well. Notably, the Informatics business made particularly impressive progress in the period. Management commentary on the outlook is positive and we maintain headline forecasts following the announcement. In addition, we increase our forecast FY 20E closing net cash position by £1m. This reflects revised assumptions on working capital movements in the second half.
Companies: Instem Plc
Salarius Ltd. (91.7% owned by TEK) has signed a distribution agreement with FXM Ingredients Inc. to distribute MicroSalt® in Mexico and Latin America.
Companies: Tekcapital Plc
Renalytix has officially commercially launched the KidneyIntelX testing platform with its launch partner Mount Sinai. The test is now fully integrated into the Mount Sinai health system, and goes beyond mere patient testing into a holistic approach to CKD patient support with Mount Sinai’s care delivery, physician education and support and billing pathways. This is a pivotal milestone for Renalytix triggering first commercial testing revenues, and was achieved in less than two years since Renalytix first IPOd in November 2018. It is estimated there are approx. 66,000 Diabetic kidney disease patients at the Mount Sinai health system, representing a significant initial addressable market opportunity. We continue to expect the launch and similar integrations of the KidneyIntelX platform into two further health care systems in FY’21. Simultaneously, Renalytix also announced agreements with LabCorp and an unnamed national medical logistics provider to use additional service centres to support the launch with the collection of blood samples at centres close to home or by primary physicians within the Mount Sinai system. Given the ongoing Covid-19 pandemic and the impact on physician visits, we believe this is beneficial and aids the use of KidneyIntelX to remotely monitor patients. This also provides a logistics framework to scale this process across multiple territories in the US.
Companies: Renalytix AI Plc
Watchstone has this morning released interim results to 30 June 2020. During the first six months of the year, the group returned a total of £50.5m/110p per share in cash to shareholders, with a further £18.4m/40p per share post period end in July. The H1 2020A underlying EBITDA loss stood at £1.4m, which excluded Watchstone's only remaining operating business, ingenie, held within discontinued operations. Encouragingly, ingenie saw a much improved trading performance in the six month period, with revenue increasing by £1.5m to £4.8m and the post-tax loss in the period reducing to £0.7m from a £1.8m loss in the comparative period. The net cash position as at 25 September 2020 is reported to have stood at £17.2m (including £2.0m held in escrow), equivalent to 37p per share. Importantly, the Board is ‘confident of returning further cash sums to shareholders in due course'.
Companies: Watchstone Group Plc
ABB to raise £13.7m for M&A; Reiterate Buy
Companies: Sumo Group Plc
Location Sciences Group PLC (LON:LSAI) is a high growth technology company and a global leader in location verification. The company recently reported results for the first half (H1) of 2020. These were in line with the trading update issued in July, with revenues up 1% (or +43% including securitis
Companies: Location Sciences Group Plc
The FY 2020 results are in line with our expectations and reflect the impact of the previously announced switch from large perpetual licences to recurring annual term licences during the year. Despite the COVID strictures, with its large global partnerships, D4t4 continues to close numerous lucrative data gathering and data management contracts with major blue-chips around the world. It is successfully converting a high proportion of its new sales to recurring revenue contracts, but this will sacrifice growth and earnings in FY 2020 and FY 2021. Nevertheless, with growing recurring revenue base, an exciting pipeline and a very strong balance sheet, D4t4 is very well positioned for continued long-term growth and security.
Companies: D4t4 Solutions Plc
LoopUp has delivered a trading update for H1, highlighting some exceptionally strong activity during the COVID-19 lockdown period, which appears to be at least partly translating into longer-term outperformance. We materially upgrade our forecasts for 2020 and 2021, and look forward to additional detail at the late-July Operational Update webinar.