Commentary: Symbility Reports Another Record Quarter From the IR firm
Commentary: Symbility Solutions (TSXV:SY) Reports Another Record Quarter
On Wednesday, November 29th, Symbility Solutions reported their Q3 2017 financial results, announcing yet another record quarter of revenue. Well on pace to achieve the guidance of $40-$42m revenue with $2-3m Adjusted EBITDA provided at the beginning of 2017, Symbility continues to impress with strong consecutive quarterly performances. Below we share some highlights from Q3 results:
· Q3’17 revenues of $11.3 million compared to $8.7 million in Q3’16, an increase of 30%. Total revenues for the nine months ended September 30th, 2017 were $30.4 million compared to $25.3 million in the same period of 2016, an increase of 20%.
o Revenue from Symbility Property grew 29% in Q3’17 to $6.97 million compared to $5.41 million in Q3’16
o Revenue from Symbilty Intersect grew 60% in Q3’17 to $2.84 million compared to $1.77 million in Q3’16.
· Q3’17 Adjusted EBITDA of $1.7 million compared to Adjusted EBITDA of $0.3 million in Q3’16, a decrease in loss of 546%. Adjusted EBITDA for the first nine months of 2017 of $1.7 million as compared to an Adjusted EBITDA loss of $0.3 million for the same period in 2016.
We highlight the growth in Symbility Property and Intersect as the two key drivers that are propelling revenue growth at a strong rate. It is apparent that these segments are positioned strongly to grow going forward with Property based on incremental revenue additions and new customers adds while Intersect based on brand name.
While the growth at Symbility has been impressive, the stock has lagged compared to their peer group. In looking at valuation, Symbility appears to be trading at a significant discount to other SaaS and insurtech companies. Canadian technology companies typically trade in the 5-6x EV/Sales mark, a value significantly higher than Symbility’s current valuation. While Industrial Alliance has a $0.70 one-year price target, we thought we would provide some examples (2 SaaS companies, 2 Insurance companies) to readers to see why exactly we believe Symbility is a good buy right now:
| Company | Price/Sales (ttm)[1] | EV/Sales (ttm) [2] | EV/EBITDA(ttm)[3] |
| Symbility Solutions (TSXV:SY) | 2.7x | 2.6x | 42.5x |
Shopify
(TSX:SHOP) | 20.3x | 19.87x | N/A
|
| Descartes Systems Group (TSX:DSG) | 13.6x | 13.21 | 39.33 |
| Verisk Analytics (NASDAQ:VRSK) | 7.7x | 8.0x | 17.2x |
| GuideWire (NYSE: GWRE) | 11.5x | 11.0x | 119.1x |
Clearly there exists a discrepancy between Symbility and other Canadian SaaS as well as American Insurance companies leading us to ask – why?
We’re hard pressed to find an exact reason as to why this is the case. Naturally, a small-cap tech stock is going to warrant some discount relative to its peers but this level of discrepancy is hard to justify.
Relative to the competitors above, Symbility is not only a growth play but at this point a value play as well. We believe at ~2.7x EV/Sales, investors are getting a bargain on a company that has not only performed well historically but continues to do so in what is now yet another consecutive quarter of growth. Given the company’s level of consistent growth, a continued focus on being Adjusted EBITDA positive, a well-capitalized balance sheet and the bright future ahead of it (including its very early initiatives into leveraging AI), we believe investors should be taking a very close look at Symbility as part of a diversified investment portfolio.
[1] All figures as of November 29
th 2017
[2] All figures as of November 29
th 2017
[3] All figures as of November 29
th 2017
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