If we look at the last 4 quarters Urbanimmersive has generated revenues of $ 4.422 m and ebitda of ~ 797k
Ebitda margins is currently at 18% but was as high as 22.85% for fiscal 2020.
If we look at the business update it mentions 3 acquisitions that would potentially add $5.6 m in revenue of which 2 have been acquired. Revenue contributions from Offerpad would add up to US $1.6 m or ~ CAD 2 m if fully realized. The previous 3 Repa's that were acquired on June 30th would add approximately $1.6 m but this is my best guess based on the previous year of contributions. Then there are a bunch of other revenue contributions that I'm not ready to quantify just yet but should provide meaningful results to the top line. Finally there is some organic growth as well but is difficult for me to quantify.
Simon Bedard has mentioned these Repa's can contribute 15 % net margins with gross margins in the 40-60% range. My best guess would be that Ebitda margins would likely exceed 20% on these acquisitions with some more or less. Lastly, I like to look at Ebitda margins because Ebitda is a good proxy for "cash flow before changes in non cash working capital." The non cash working capital component is highly responsible for volatile changes in cash flow which can mislead investors. I focus on the former.
Revenue estimation post acquisition would likely exceed
($4.422 + $1.6 + $2 + 5.6 ) m =~ 13.622 m
You can add an arbitrary organic growth number to that if you'd like but I prefer not to until I actually see it come to fruition.
My best estimate for ebitda using a 20% ebitda margin would be $2.72 m. If we use 15% ebitda margins then we would arrive at $2.04 m. I would say if the Offerpad deal is fully realized then we are likely to be surprised on the upside.
Given that I've been pretty conservative in my assumptions there is a possibility for the revenue run rate to be in the $15-20m range. Now we're in the $3-4 m ebitda range using 20% ebitda margins and $2.25- $3m ebitda range using 15% ebitda margins.
The bottom line is that the company is growing cash flow at a much faster pace than total share growth rates. This tells me that earnings per share is likely to increase by at least double digits. I'm encouraged by the fact that they're paying a good price for these acquisitions and we're not even talking about potential revenue synergies from these deals.
If there's any company that has the potential to be a 100-bagger I can't think of a better company than this one.