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VIS: Micro-Cap SaaS Provider Hitting an Inflection Point

What you need to know:
• Visionstate is a rapidly growing SaaS provider for the facilities management industry across the globe. The Company is targeting a largely untapped market across hospitality, education, and healthcare.
• The Company has hit an inflection point in its financial results, as revenue is growing >100% and costs are declining dramatically.
• VIS is implementing AI solutions to enhance operational efficiencies, optimize resource utilization, and open new market opportunities.

Visionstate Corp. (VIS:TSXV, VSSSF:OTC) is a rapidly growing software provider for facilities management, specifically digital cleaning management. Visionstate’s products are penetrating a large TAM across various industries which still use legacy solutions. We believe that VIS has hit an inflection point for its revenue growth and margins, having posted 104% revenue growth and 45% SG&A reduction in Q2, placing the Company on a trajectory for profitability in the coming quarters.

Investment Thesis
Rapidly Improving Financials. In Q2, VIS posted $190K in revenue (+104% YoY) and for H1, VIS generated $385K in revenue (+113% YoY). Furthermore, SG&A expenses have declined by 45% YoY in Q2, representing 38% of revenue compared to 142% last year. VIS lost $61K in net income in the quarter compared to $192K in Q2 last year, indicating an inflection point for the financials.

Simplistic SaaS Offering. VIS’ subscription-based SaaS model for its WANDA digital cleaning management system ensures affordability, ease of implementation, scalability, and customizability. This model allows clients to access innovative technology without significant upfront costs, making it attractive for various industries looking to improve their cleaning and maintenance operations.

Large Market to Penetrate. Visionstate is targeting various industries including education, healthcare, offices, hotels, airports, and municipalities. Management estimates that there are 7.8M potential addressable clients in Canada and the U.S., many of which still use pen-and-paper solutions, creating ample runway for the Company to penetrate. Now that its software is proven and trusted, VIS is aiming to sign multi-location contracts and partnerships with major clients.

Upside from AI Segment. The integration of advanced AI through Next Vision AI and Visionstate’s IoT solutions enhances operational efficiencies, optimizes resource utilization, and opens new market opportunities. By staying ahead of industry trends with AI capabilities, Visionstate can offer more intelligent and responsive solutions to its clients.

High Insider Ownership. Visionstate boasts over 30% insider ownership including management owning 9% of the outstanding shares. This aligns incentives with shareholders and motivates the team to execute. We believe the management team is highly experienced in the sector and can lead the Company to future growth.

Unknown and Undervalued. VIS is largely unknown in the public markets, only being a $4.4M mkt cap and trading at only 5.5x run-rate sales (or even lower if you assume further growth in H2), a discount to larger cap SaaS firms. While this is simplistic, it speaks to VIS’ current price being a cheap entry point.