Quarterhill expects to keep growing through acquisitions. To fuel these acquisitions, it has $112.8 million in working capital and roughly $76 million in cash and cash equivalents on its books.
The company could be on track to generate $500 million in annual revenue by 2025, according to the team’s forecasts. By then, it also expects to hit an EBITDA (earnings before interest, taxes, depreciation, and amortization) margin of 15% and trade at a 15 times EBITDA multiple.
If these targets are met, Quarterhill could be worth $1.1 billion by 2025. Right now, the company is worth just $186 million. Put simply, there’s upside potential of roughly 600%.
https://ca.finance.yahoo.com/news/quarterhill-tsx-qtrh-deeply-undervalued-213000845.html?
- "The company could be on track to generate $500 million in annual revenue by 2025, according to the team’s forecasts."
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Written by Vishesh Raisinghani at The Motley Fool Canada
Layoffs and drawdowns continue in the tech sector. Unprofitable startups with flimsy business models have been punished by investors since 2021. However, the tech selloff has also impacted mundane and profitable tech companies with brighter futures.
Toronto-based Quarterhill (TSX:QTRH) firmly fits the latter category. Here’s a closer look at this overlooked and underappreciated tech conglomerate.
Transport tech
Niche enterprise software is extremely lucrative. Providing mundane but essential services such as a message board for container ship operators or an inventory tracking software for farmers is far less competitive than the consumer tech sector. These enterprise software firms have sticky revenue because their tools are mission critical for their subscribers.
Quarterhill is focused on acquiring software tools in the transportation sector. The company’s subsidiaries include IRD, ETC and WiLAN. These subsidiaries focus on data analytics tools for traffic flow, toll booth operating software and transport-related patents.
Before you yawn, I should point out that Quarterhill generated $254.8 million in revenue in the first nine months of 2022 — 242% higher than the previous year. The company also has a revenue backlog of US$581 million (CA$778.8 million) on its books.
Quarterhill is a growth-oriented tech company with enough runway ahead of it to deliver significant gains.
Outlook
Quarterhill expects to keep growing through acquisitions. To fuel these acquisitions, it has $112.8 million in working capital and roughly $76 million in cash and cash equivalents on its books.
The company could be on track to generate $500 million in annual revenue by 2025, according to the team’s forecasts. By then, it also expects to hit an EBITDA (earnings before interest, taxes, depreciation, and amortization) margin of 15% and trade at a 15 times EBITDA multiple.
If these targets are met, Quarterhill could be worth $1.1 billion by 2025. Right now, the company is worth just $186 million. Put simply, there’s upside potential of roughly 600%.