In the right place at the right time
We think this ‘battle-hardened’, cash-rich (Est. April ’21 net funds of £6.1m) & now profitable SaaS firm is ideally placed to benefit from strong secular demand for its cutting-edge & fully integrated Big Data, AI, spend analytics, SMDM (Supplier Master Data Management) & customs/duty handling applications.Today the company posted record revenues (FY20 £7.1m +2.1% LY) & profits, aided by the £49k acquisition of Langdon (+£0.9m) in Sept’19, partly offset by the elimination of low margin pass-through contracts (£0.6m). Encouragingly, EBITDA (pre SBPs) was positive for the 1st time ever at £36k (-£432k LY), despite expensing all £1.3m (£0.9m LY) of its R&D costs (18% sales).
In terms of FY21, we understand YTD trading is in line with expectations (ED est +£309k EBITDA on turnover up +7.1% to £7.6m), even after experiencing some order delays related to the pandemic. Here we are modelling flat H1 organic sales growth, followed by mid-single digits in H2 & 10%+ from FY22 onwards.
At 5.5p, we think Rosslyn shares not only trade on a modest 1.6x CY EV/sales (vs peers >5x), but are also targeting double digit top line growth from FY22 onwards, generates 84.7% gross margins, 40%+ EBITDA drop through rates and 88% recurring revenues – with healthy visibility.
Putting all this together, we have bumped up our valuation from 9.5p to 10p/share, reflecting the improved gross margins.
Coupa Software is a provider of business spend management (BSM) solutions. The company provides a cloud-based BSM platform that delivers a range of capabilities that would typically require the purchase and use of multiple disparate point applications. The company's main platform consists of procurement, invoicing, expense management and payments modules that form the transactional engine for managing a company's business spend. In addition, the company's platform provides supporting modules to help companies further manage their spend, including strategic sourcing, spend analysis, contract management, supplier management, and contingent workforce management.
Elastic is a search company. The company's products enable its users and customers to instantly find relevant information and insights in large amounts of data. The company provides the Elastic Stack, a set of software products that ingest and store data from any source, and in any format, and perform search, analysis, and visualization in milliseconds or less. The Elastic Stack is designed for direct use by developers to power a variety of use cases. The company also provides software solutions built on the Elastic Stack that address a variety of use cases. The Elastic Stack and the company's solutions are designed to run on premises, in public or private clouds, or in hybrid environments.
Proactis Holdings is engaged in the development and sale of business software, installation and related services.
Rosslyn Data Technologies is engaged in the development and provision of data analytics software. Co. develops and commercializes its customer-centric cloud data platform, RAPid. RAPid extracts, integrates and synchronizes data from sources. RAPid then transforms and enriches this data, providing the user with tools to build charts, tables and apps in order to visualize the information and deliver insight. This is all performed over a secure cloud connection, giving access from mobile, laptop or tablet.
Wandisco Plc is engaged in the development and provision of global collaboration software.
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