Wish pond Technologies Ltd

Wishpond Technologies Ltd (TSXV: WISH) is a provider of marketing-focused online business solutions providing digital marketing solutions that empower entrepreneurs to achieve success online. The company offers an all-in-one marketing suite that provides companies with marketing, promotion, lead generation, and sales conversion capabilities from one integrated platform.

Key highlights 

• Made strategic acquisitions:To accelerate growth, the firm made two significant acquisitions of marketing and sales technology firms, having recurring-revenue models. It acquired “Invigo Media Corp.” a profitable and growing marketing technology and services company primarily focused on serving medical clinics. Over the last six months, Invigo achieved an annualized revenue of approximately CAD 2.7 million and EBITDA margins exceeding 20%, and California based “PersistIQ”, which provides sales engagement technologies. It holds a base of approximately 800 clients and has generated recurring revenue of USD 1.1 million with EBITDA margins of about 20% in 2020. After these acquisitions cross-selling opportunities and new customer segments would be made available to the company.
  

• Registering sequential revenue growth: Despite the turbulent year of 2020, the Company maintained its momentum and had a strong success in its revenue. The Company is always working closely with customers, and as a result, its presence is growing in tandem with volume, which is commendable. Compared to the previous similar period, the Company's sales increased by 74% to CAD 2.9 million in the reporting period.

Source: Company 

• New product development: The company just introduced its Payments Product, a new service that allows merchants to accept payments directly from landing pages instead of referring customers to an external website or payment gateway. We believe that by collecting fees on payments handled through the Company's landing pages and websites, would provide the Company with a new stream of revenue.
  

   Financial overview of Q1 2021 (Expressed in Canadian Dollars)

Source: Company 

• In Q1 2021, the company achieved a record quarterly revenue of CAD 2.8 million compared to CAD 1.6 million in Q1 2020. An increase of 74% in revenue was mainly due to acquisitions made by the company.
• On the back of higher revenue, it clocked a gross profit of CAD 1.7 million, against CAD 1.0 million in the previous corresponding period.
• The company registered higher operating expenses in the reported period, which stood at CAD 2.8 million v/s CAD 1.1 million in pcp; thus, operating loss increased to CAD 1.0 million against CAD 0.1 million in pcp.
• Net loss stood at CAD 1.1 million in Q1 2021, compared to CAD 0.17 million in pcp.
  

Risks associated with investment

To stay competitive, the corporation must create new software products or features and improve its present marketing services. The company's business and operational performance would suffer if it failed to position and/or price its items to satisfy market demand. Low trading volume can also enhance the price volatility of the company's stock. 

Stock recommendation

The first full quarter after being a publicly traded business, Q1 2021, was a watershed moment for the corporation. It produced record revenue and completed two acquisitions during the quarter. The excellent results were fueled by significant organic growth in the quarter as well as contributions from the Invigo and PersistIQ acquisitions. In addition, despite foreign exchange headwinds from a lower US dollar, the firm is on course to deliver significant organic growth in Q2-2021, fueled by greater capacity in the Company's sales force, positive contribution from acquisitions, and new product related revenues. It also plans to boost its Monthly Recurring Revenue (MRR) through organic growth and acquisitions, which is a big plus. Furthermore, on the valuation front, the stock is available at a forward EV/Sales multiple of 4.76x against an industry (Software & IT Services) mean of 8.4x. Based on technical analysis, the stock has support at CAD 1.3 level. Hence, considering the aforesaid rationales, we recommend a “Speculative Buy” rating in the stock at the closing price of CAD 1.55 on July 08, 2021, with low double-digit (in percentage term) upside potential.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock if the price closes below the support level.

One-Year Technical Price Chart (as on July 08, 2021). Source: REFINITIV, Analysis by Kalkine Group

Glacier Media Inc

Glacier Media Inc (TSX: GVC) is a Canada based company which offers information and marketing solutions. It operates in three segments Environmental, Property and Financial Information, Commodity Information and Community Media.

Key highlights

• Disposed JWN energy business: GVIC Communications Corp., a subsidiary of the company, has sold its JWN Energy information business to geoLOGIC systems ltd for CAD 4.5 million in cash and a possible earn-out of up to CAD 3.5 million. The earn-out is based on revenue and would be paid out over three years. It reported a CAD1.2 million receivable related to the discounted deferred consideration as a receivable under other assets.

• Higher cash flow from operations: The company reported higher consolidated cash flow from operations of CAD 5.9 million (before changes in non-cash operating accounts) for the three months ended March 31, 2021, as compared to CAD 0.5 million for the same period in the prior year.

• Strong Balance Sheet: The Company is in a strong financial position with the Cash and cash equivalents balance at CAD 15.9 million, increased from CAD 14.2 million on December 31, 2020. Moreover, the Company had no senior debt and current and long-term debt totaled at CAD 2.6 million.
  

Financial overview of Q1 2021 (In thousands of CAD)

Source: company

• In Q1 2021, the company reported CAD 39.5 million revenue, compared to 43.3 million in the previous corresponding period. The revenue fell primarily due to declining print advertising revenue and the cyclical nature of certain businesses of the group. This is partially being offset by the increase in community media digital revenue.
• The company's operating profit increased to CAD 4.4 million in the reported period, compared to CAD 1.9 million in pcp. The increase was mainly due to lower direct expenses, which stood at CAD 25.3 million V/s CAD 31.9 million in pcp.
• Net gain on sale of CAD 2.2 million along with lower interest expense and lower depreciation helped the company to clock a net profit of CAD 3.3 million in Q1 2021, against a net loss of CAD 12.1 million in pcp.

Risks associated with investment

The company derives its revenues from selling advertising and subscriptions related to its publications; a drop in the subscription level can lead to adverse results. Foreign exchange rate fluctuations, the seasonal and cyclical nature of the agricultural and energy sectors, government programs discontinuation, general market conditions in Canada and the United States, changes in the prices of purchased supplies such as newsprint, and cybersecurity risk are among the other risk factors.

Stock recommendation

While the pandemic continues to have an impact on the Company's operations, its digital media, data, and information businesses have fared reasonably well. In some sectors, revenues have started to improve and are steadily improving. A significant positive is that the company took substantial steps to decrease operational expenditures in order to ensure that its businesses can function successfully at lower sales levels. Furthermore, the Company is trying to maintain adequate levels of operational income within these limits, as well as making deliberate efforts to improve revenues, profits, and cash flow. On the valuation front, the stock is available at TTM EV/SALES of 0.47x against the industry (Media & Publishing) median of 2.6x. Based on technical analysis, the stock has support at CAD 0.35 level. Hence, considering the rationale mentioned above, we recommend a “Speculative Buy” rating on the stock at the closing price of CAD 0.43 on July 08, 2021 with a lower double digit (in percentage terms) upside potential.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock if the price closes below the support level.

One-Year Technical Price Chart (as on July 08, 2021). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.