$SPN.V Q3 Analysis, Q4 and F2022 outlook, valuation and PTFollowing are my thoughts on SPN.V Q3 financial results, Q4 and 2022 outlook, price target and valuation to its peers:
Snipp’s bullish journey started when they posted +51% YoY increase in revenues in Q2 2021 from $2M USD to $3M USD and Q3 YoY increase in revenues by +154% from $2.1M USD to $5.4M USD mainly driven by increase in international business from $0.2M to $2.2M or 1000% and $2M contract with Canadian Province announced on 2021-05-05 delivered in Q3 2021. To understand why their international business has been increasing I suggest you to read news of last 6 months. One of the news which increased my conviction on this company was released on 2021-09-21:
Snipp Interactive Inc. Launches Program for Leading American Beverage Company in Partnership with a Top 5 Global Research Firm. Contract Value Ranges Between USD $1-$2MM. Snipp has entered into agreement ("Client") to implement the Company's proprietary Snip Rewards Platform initially across 7 countries for another key customer of this Client - an American multinational beverage company ("New Customer")
From an increase in year over year revenues of +$4.5M USD as of P9YTD ($11M USD vs. $6.5M USD), the company generated additional $1.4M in gross profit ($6M USD vs. $4.6M USD) which assisted in increasing EBITDA by +$0.93M or +444%. from $170K in F20P9YTD to $1.1M in F21P9YTD
Backlog:
Looking at the backlog, in Q1 21 it was $7.5M USD (60% YoY increase), $9.5M USD in Q2 21(157% YoY increase), and $9.4M in Q3 21 (141% YoY increase) which suggests increase in revenue are supported by strong backlog and growth is not one or two quarter story.
Outlook:
To be conservative, I expect Snipp Interactive to hit $15M USD revenues in F21 (+73% YoY increase) and Q4 to generate $4M USD in revenue which is a year-over-year increase of 83% or +$1.8M with minimum 60% annual gross profit in F21as guided by the CEO in Q3 financials news release “Over time as we continue to expand our topline, we expect that margins will trend back to our historical 60-70% range," said Atul Sabharwal, Founder & CEO”.
For F22, after analyzing all recent contract wins and increasing backlog, assuming revenues increasing by 25% over F21 to $19M USD won’t be an overstatement.
Valuation:
Following valuations are of marketing & loyalty companies that are in the same industry where Snipp Interactive operates in. $SNIPF in US is trading at $46M market cap @ $.195 and based on trailing 12 months of revenue, they are trading at 3.5x P/S. Assume $SNIPF does $15M USD revenue in 2021 (mentioned above) and on minimum grow by another 25% in 2022 to $19M USD revenue, that’s 2.25x P/S ratio to 2022 revenues.
Now let’s look at valuation of two public companies and one private’s:
Springbig, Marijuana industry marketing platform and loyalty company, will go public at $500M worth with company on track to deliver $24M in revenues in 2021. It will be trading at 21x+ P/S ratio soon in the market.
MailChimp, Mailchimp is an American marketing automation platform and email marketing service, used by businesses to manage their mailing lists and create email marketing campaigns and automations to send to customers got taken out for 15x FY20 Sales or at $12B valuation.
EQ Inc. (EQ.V), a provider of digital marketing services. The company uses real-time technology and advanced analytics to improve performance for web, mobile, social and video advertising initiatives. currently trading at 7.16x P/S of TTM and negative EBITDA of 2.8M of TTM.
In conclusion, if we take an average of P/S ratio of 3 companies above, which is 14.3x P/S multiple, but to be conservative, reduce that in half to 7.5x P/S, I think Snipp Interactive has a potential to trade at minimum P/S of 7.5x of 2022 revenues or at $142.5M USD market cap which equates to $0.60 USD or $0.76 CAD approx. share price.
Technicals: Snipp Interactive $SNIPF hit new 52 WK high at .21 cents with 1M volume traded on 2021-11-02. Average volume on SNIPF on OTC is 40K. I don’t know all the details, but it seems like a big buyer accumulated a lot of shares out of 1M on 2021-11-02. Time will tell…
Disclosure: I own shares in SPN.V. I wrote this report myself and the forecasts and estimates expressed herein reflect solely my opinions. This report is not a recommendation or solicitation to buy or sell securities. My analysis may contain inherent errors. Please consult a qualified financial advisor and conduct your own due diligence before making any investment decisions