Kinaxis
Eight Capital analyst Christian Sgro sees some encouraging signs from Kinaxis (Kinaxis Stock Quote, Charts, News, Analysts, Financials TSX:KXS). Sgro reaffirmed a “Buy” rating on the stock in a recent update, saying he has confidence the supply chain management software company will hit its 2023 guidance targets.
Ottawa-headquartered Kinaxis delivered its second quarter financials on August 9, reporting revenue up 31 per cent year-over-year to $105.8 million and gross profit up 28 per cent to $63.7 million. Adjusted EBITDA was up 47 per cent to $15.2 million, which cash from operating activities was up a full 66 per cent to $13.9 million. (All figures in US dollars except where noted otherwise.)
Srgo noted that KXS finished the quarter with $293.4 million in cash and short-term investments and no debt. He thinks M&A will be a key use for capital over the near term, as the company continues its pace of mid-sized “acqui-hires” or adjacent technology acquisitions.
“Our estimates are largely unchanged, generally at the midpoint of management’s reaffirmed guidance. With a large subscription contract being accounted for as term instead of SaaS, we have increased our 2023 term license to the high end of the range while reducing our SaaS estimate,” Sgro wrote.
By the numbers, Sgro is now forecasting revenue to rise from $366.9 million in 2022 to $429.3 million in 2023 and to $514.0 million in 2024. Adjusted EBITDA is expected to go from $79.4 million in 2022 to $65.4 million in 2023 and to $88.0 million in 2024.
Sgro reiterated his 12-month target price of C$230 per share, which at press time represented a projected return of 45 per cent.
MOGO
Canadian fintech company Mogo (Mogo Stock Quote, Charts, News, Analysts, Financials TSX:MOGO) is shifting focus to profitable growth, according to Eight Capital analyst Adhir Kadve. In a recent report to clients, Kadve maintained his “Buy” rating on the stock, saying investors should climb aboard before shares re-rate higher.
Vancouver-based Mogo, which has a next-gen digital ecosystem for non-bank financial products such as online lending, credit scores, prepaid credit cards and mortgage brokering, recently announced its second quarter 2023 financials.
Revenue, which came in at $16.0 million, was down seven per cent year-over-year and adjusted EBITDA of $1.8 million compared to a loss of $4.1 million a year earlier. The company said the lower topline was due to it dropping some of its unprofitable products.
Kadve said there are early signs of organic growth returning to Mogo’s lending, MogoWealth and Payments businesses. Kadve also noted the expansion in Mogo’s user base which grew by 25,000 quarter-on-quarter to sit at 2.04 million, up two per cent year-over-year.
“The company continues to streamline its operations and strategically decrease OpEx, which has resulted in a significant increase in profitability,” Kadve wrote.
“With a narrow focus on a core set of products, including Lending, Wealth management, and Payments businesses, all of which are showing early signs of organic growth, Mogo has an ultimate goal to reach a ‘Rule of 40’ financial profile by H2 of 2024. We continue to believe that as Mogo executes on delivering this financial profile, shares should see a significant re-rate opportunity,” he added.
With the update, Kadve reiterated his $9.00 target price, which at press time represented a projected return of 194 per cent.
Q4 Inc.
New quarterly numbers from capital markets tech company Q4 Inc (Q4 Inc Stock Quote, Charts, News, Analysts, Financials TSX:QFOR) brought mixed results, according to National Bank Financial analyst Richard Tse. But in a review for clients recently, Tse maintained an “Outperform” rating and C$5.00 target, saying the stock offers a compelling risk/reward.
Toronto-based Q4 published its fiscal fourth quarter 2023 results on Wednesday for the period ended June 30, 2023. The company posted revenue up ten per cent year-over-year to $15.1 million and an adjusted EBITDA loss of $3.8 million compared to a loss of $8.7 million a year ago. (All figures in US dollars except where noted otherwise.)
The company, whose platform facilitates interactions across the capital markets, offers tools such as investor relations CRM, analytics, surveillance and virtual events solutions. Over the quarter, Q4 said it had more than 2,000 clients and agencies active on its platform, while it launched its Earnings Lifecycle application for supporting the planning, execution and impact of quarterly disclosures.
Among the key takeaways on the quarter, Tse noted that annual recurring revenue was up 4.5 per cent to $55.8 million, but it appeared that Q4 lost 12 potential prospects that were in its backlog. But Tse said despite the churn, controllable retention remains reasonably solid at 93.5 per cent.
“Despite the mixed results, the Company is progressing on its profitability targets through expanding margins and at 1.4x EV/S F23E, the risk-to-reward profile looks compelling, particularly for a name that appears to be on track to exiting F23 with a positive Adj. EBITDA. Outperform,” Tse wrote.
Tse reiterated his 12-month target of C$5.00, which represented a projected one-year return of 30 per cent at the time of publication.
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