Yahoo Finance
Filing
June. 12, 2022
Mar. 31, 2022 Data
Price: $0.72. Shares: 52m, Cap: $37m.
1. Business
(1) History
(1) History
The company was founded in 2009 by Ali Tajskandar and was mainly funded by Hossein Malek. Originally it developed a product search engine company allowing customers to find niche products sold by local retailers. It didn't do very well. In 2012, it started to develop a contest app for marketing and later added the landing page, email marketing, website popups, appointments, etc.
It had grown rapidly through the years with around 30% annual revenue growth for several years. By 2019, it has invested around $5m in total and reached a revenue of 6m and cash even. In 2020, it achieved $7.9m in revenue and 500k in adjusted EBITDA.
It IPOed in Dec. 2020 through a reverse merger. It converted the $4.5m debt it owns into shares and raised $6m at $0.75/share. In early 2021, it raised another $7m at $1.75/share.
After IPO, it acquired 4 small businesses for around $5m in cash and issued some shares. There is also $2.5m earn-out liability which can be paid with cash or the company's shares. The integration of these businesses seems to work out well.
In 2021, it achieved $14.8m in revenue which is over 80% growth vs 2020's revenue. Around half of the growth is organic, and another half is from the acquisitions. Adjusted EBITDA is around $0. However, real income in 2021 is around $-1.8m.
At the end of 2021, the leasing of its main office in Vancouver had expired. It decided to let its employee continue to stay work from home. This could save the company around $350k every year. In 2020, it has 12 salespeople, it doubled the number to 25 in 2021, and is expected to employ 45 salespeople by 2022.
(2) Product & Business
All in one online marketing tools: including landing page, contest, email marketing, etc. The core product should be the contest product which is one of its old products.
Its customers can choose to be a DIY style that just uses its software and manage their marketing content by themselves. The company charges monthly fee's from $50 to $150. They can also hire the company to manage their marketing campaigns. They might be paying $500 and up. By 2020, both DIY customers and full-service customers count around 50% of revenue each. Full-service revenue tends to grow faster.
By each individual product line, its product seems less polished than its competitors, but as a whole, its product is fairly good and the price is very affordable. This is its major competitiveness.
Margin: Its margin varies from 65% to 70%. Usually, the Q1 margin will be lower while Q4 will be higher.
R&D: From 2017 to 2019, it spent around $500k each year on R&D and capitalized around $200k. In 2020 and 2021, it capitalized $300k and $800k in R&D while the real spending is unknown.
Revenue concentration: It has around 3000+ customers and is pretty diversified. Around 25% of its 2021 revenue is from agents, among which 18% is from one customer. Around 25% of 2021's revenue is from B2B customers.
Cyclical nature: Usually the first quarter is the weakest quarter of the year. Within Q2 and Q3, its revenue will pick up and reach its peak in Q4.
Geographic: Around 80% of its revenue is from the US and the rest is from Canada and other places. Since a big part of its cost is inside Canada, a stronger USD vs CAD will benefit the company and vice versa.
(3) Industry
The online marketing tool market is very competitive. There are main players.
HubSpot: A US-based public company with around $1.3B in sales in 2021 and $15B in market cap.
https://thedigitalmerchant.com/sales-funnels/wishpond-vs-hubspot/
(1) Management
CEO Ali Tajskandar: He is the founder from the beginning. Before that, he is a software programmer for many years. Previously, he had worked for SoundLogic, a company founded by Hossein Malek. His major at university is computer science and he obtained an MBA from UBC after that.
(2) Ownership and compensation
Hossein Malek: around 11.5m shares including 6m shares that were issued by converting $4.5m no interest debt provided by him to the company. In 2000, Mr. Malek successfully sold one of his companies, SoundLogic, to Lucent Technologies for an undisclosed amount.
Ali Tajskandar: 5.5m shares. He also holds voting control over 3m shares held by Malek.
Jordan Gutierre: COO, holds 2m shares.
Nicholas Steeves: Chief Product Officer, holds 2m shares.
Nasim Arianpoo: CEO of LeanTechnique Ltd., holds 5.1m shares.
Golnaz Navabi: A Software developer, who holds 4.1m shares.
Management compensation is very modest. In total, all insiders hold over 40% of total shares.
3. Financial data
Notes:
Notes:
Notes: Debt and cash
As of Mar. 2022, $4.5m cash, $1.7m in contingent liability.
Notes: Share data
Before the IPO, there are 26m shares outstanding with no capital invested, but there is a $4.5m debt due to Hossein Malek. It was converted to 6m shares at the price of $0.75/share. It also issued around 6m private placement at the same price; 5m options were exercised; 2.7m shares were issued to the shell company. After IPO, there are 46m shares outstanding.
In 2021, it issued around other 6m shares for around $8m from a bought deal and acquisitions, etc.. By end of 2021, the total paid capital is around $19m. The shares outstanding are 52m.
At Mar. 2022, there are 3.9m options outstanding. However, very little(<500k) is priced below the current market price.
4. Valuation and comments
(1) Currently the company is trading at less than 2 times its projected 2022 revenue. It is quite cheap compared to its peers. However, on the bottom line, it is still losing money last year. It intentionally pursuits growth over profitability. So far, it has been used around $15m in cash while achieving a $20m+ revenue running rate.
(1) Currently the company is trading at less than 2 times its projected 2022 revenue. It is quite cheap compared to its peers. However, on the bottom line, it is still losing money last year. It intentionally pursuits growth over profitability. So far, it has been used around $15m in cash while achieving a $20m+ revenue running rate.
(2) Since 2020, it has aggressively invested in marketing. Sales and marketing expenses have raised from $0.7m to over $2m in 2021. It could be profitable by simply cutting sales and marketing expenses.
(3) Going forward, it is very likely to continue to grow its revenue. But it is hard to tell when it will start to make money. Eventually, the valuation of the company should be based on its profitability. Unfortunately, it is hard to estimate how profitable it will be in the future.
5. Risk
(1) Since it operates in the online advertising industry, an economic downturn most likely will affect the advertising market seriously. However, because it has over 3000 customers and also the majority of its customers are SMBs. I believe the risk to their revenue is not as bad as the whole ad market.
(1) Since it operates in the online advertising industry, an economic downturn most likely will affect the advertising market seriously. However, because it has over 3000 customers and also the majority of its customers are SMBs. I believe the risk to their revenue is not as bad as the whole ad market.
(2) It has a big agent-customer which still accounts for 18% of its revenue in 2021. Loss of the customer might have quite a big effect on its revenue.
(3) It is a relatively new IPO. There is limited information about the company.
6. Conclusion
Overall, the company has grown very well in the past. It is also managed very well. The growth potential is very high. The current price is cheap compared to its peers. However, it is not making any profit yet. Should not be heavily invested and should be monitored closely.
7. Links
