Yahoo Finance
Filing
2. Management
Feb. 28, 2022
Sept. 30, 2021 Data
Sept. 30, 2021 Data
Price: $28.3. Shares: 3.8m, Cap: $107m.
1. Business
(1) History
(1) History
The company was founded in 2006 by Brian Balbirnie and James Learish. Originally it was called My EDGAR. Its main product is a filing service with SEC website. Its main focus is to help clients to comply with SEC requirements and provide easier filing tools.
It IPOed in 2007 through a reverse merger. During the year, it added the printing and fulfillment service which prints and distributes shareholder documents for its clients. In 2008 and 2009, both lines of business did well and both generated around 700k to 800k revenue. It started to generate some small profits in both years.
From 2010 to 2012, helped by a one-time printing & distributing project and SEC's new XBRL filing requirements, it had grown revenue to around $4m in 2012. Profit is still very small.
In Aug. 2013, it acquired PrecisionIR for $5m. PrecisionIR is a web-based investor relations company. Its major product is called Annual Report Services(ARS). It sends companies' annual reports to shareholders by mail or email. It also has a webcasting & teleconference service. At the time, PrecisionIR is generating around $14m annual revenue, and the revenue was declining. As a result, in 2013, ISDR's revenue doubled from $4m to $8m and it generated $1.7m operating cash.
In the first quarter of 2014, the company uplisted to NYSE. In Oct. 2014, the company acquired the Accesswire press release business line for $1.8m. From 2014 to 2017, its revenue from the ARS was declining which is expected. Also, the printing and filing business is also not growing as well. The ACCESSWIRE business is picking up but relatively small. As a result, its revenues for those years were flat at around $12m/year level, and operating cash is around $2m/year. It paid a $590k(0.2/share) dividend in 2017.
In late 2017, it acquired Interwest Stock Transfer for around $3m. It is a corporate stock transfer business with over 300 clients. In early 2019, it acquired the VisualWebcaster Platform from Onstream Media Corporation for $2.8 million. VWP is a cloud-based webcasting & webinar system.
From 2018 to 2020, the two new acquisitions and the continued growth of ACCESSWIRE had more than offset the decline of the ARS business. In 2020, the pandemic also pushed its customers to use more online services like virtual AGM, virtual conferences, etc. As a result, it had grown revenue around $2m/year to $18.5m in 2020 with over $4m in operating cash.
In the first 3Q of 2022, revenue is 16.2m vs 13.8m last year. Operating cash is 3.7m vs 3.2m last year.
(2) Major business
1) Communications: include newswire, webcasting, virtual conference, virtual AGM, IR website, etc. It has grown very well since the company acquired ACCESSWIRE. Now it accounts for around 65% of total revenue. The growth rate of this segment is at least 30% for the past several years and it continues to grow at that rate. 2) Compliance: includes the old SEC filing, ARS, Stock transfer, printing and distribution services, etc. The ARS and printing services have been in steady decline for several years. For the last 3 quarters of 2021, total revenue from compliance actually has increased by 15%. However, it seems because of some temporary printing projects.
(3) Industry
Competitors: Business Wire, PR Newswire, Global Newswire.
(1) Management
CEO Brian Balbirnie: He founded My-EGDAR at around 35. Before that, there is very little information about him.
(2) Ownership and compensation
Total shares outstanding is 3.8m. Brian holds 610k. 17%. All insiders hold around 20%.
Brian's salary in 2020 is just $200k which is very modest.
3. Financial data
Notes:
Notes:
Notes: Debt and cash
As of Sept. 2021, 22m in cash and no debt.
Notes: Share history
At IPO, 16m shares are outstanding. CEO Brian Balbirnie 5.7m shares(33%). CAO James Learish 4.8m shares (28%).
In Jan. 2009. James Learish resigned from the company and sold 4.5m of his shares at just $13.5k. Half of the shares were sold back to the company and got canceled. The other half of the shares were sold to James Michael, one of the management of the company. In 2010, he sold his remaining 425k shares as well. Those 4.8m shares could be worth over $12m today. James Michael kept those 2.3m shares until 2020 when he no more appeared as a 5% owner.
In 2011, the company did a 1 for 10 reverse split. Total shares outstanding are 1.75m after the conversion. Brain held 610k of them which is 32%. Shares outstanding at the end of 2013 is 2m. The increase is mainly from options, etc. Brian holds 640k shares 31%.
In 2014 in connection with the acquisition of PrecisionIR, it issued a $2.5m 8% debt which can be converted into the common shares at $4/share. In 2014 and 2015, the debt was converted into around 600k shares. After the conversation, by end of 2015, there are 2.8m shares outstanding. Brian holds 630k shares(22%) while the debt owner David Sandberg holds 660k shares(23%). In 2016, David Sandberg left the board and sold his shares.
In 2018, the company issued 800k shares at $15.5/share for $13.3m. Later, the company repurchased 200k from a fund at $12.25/share. Total shares outstanding is 3.8m at end of 2018. Brian holds 620k. Those numbers stay roughly the same till now.
4. Valuation and comments
(1) Currently the company is trading at 5 times of revenue and 35 times P/E which seems very expensive. However, its real cash generation rate is above $4m/year. That gives it a $25 times P/E. If considering the $22m cash on the balance sheet. It is not really that expensive.
(1) Currently the company is trading at 5 times of revenue and 35 times P/E which seems very expensive. However, its real cash generation rate is above $4m/year. That gives it a $25 times P/E. If considering the $22m cash on the balance sheet. It is not really that expensive.
(2) Despite the high growth in the past, the company's share of the total newswire market is still very low. The company has a very strong potential to continue doing very well. Currently, the majority of its customers are small companies. It is possible to penetrate the newswire business of bigger companies.
(3) The product development was very good during the past. The company is constantly working on newer products while improving the existing ones. However, the marketing part seems not so strong. The company currently is putting more resourcess on marketing.
(4)The company has a pretty good working culture. It has a low employee turnover rate as it takes care of its employees pretty well.
5. Risk
(1) Some of the growth during the last two years was caused by the pandemic. Once the pandemic is over, the demand for those products might decline.
(1) Some of the growth during the last two years was caused by the pandemic. Once the pandemic is over, the demand for those products might decline.
(2) Generally the company will benefit from a bull market while hurt from a bear market. If the stock market is in a deep recession, it could affect its business.
(3) The continuing growth needs lots of investment in marketing and R&D etc. It might experience short-term higher expenses in the future.
6. Conclusion
Overall, the company is managed very well. It is a good growth company with a lot of potentials. The current price is a little high but still acceptable. Should seeking buying opportunities.
