The Bigtincan Holdings Ltd (ASX: BTH) share price has climbed steadily after the ASX software company reported a big jump in annualised recurring revenues over the June quarter.
Since crashing in mid-March to a 52-week low of just $0.265, the Bigtincan share price has surged more than 230% to $0.89 in mid-morning trade today.
What does the company do?
Bigtincan develops software to streamline and automate sales and marketing functions for its business clients.
Bigtincan’s flagship sales enablement automation platform is a centralised, integrated software solution designed to support businesses throughout their entire sales and marketing lifecycle. That’s from onboarding and training new staff, to engaging new customers and providing accurate reporting.
How is Bigtincan performing?
Despite the challenges of operating during COVID-19, results for the June quarter were strong across just about all key financial metrics. Quarterly customer cash receipts were up 89% against the prior comparative period to $10.4 million, while annualised recurring revenues were up 53% year-on-year to $35.8 million. The company reiterated its FY20 guidance for organic revenue growth of between 30% and 40%.
The software company’s balance sheet was also healthy with $71.9 million in cash and equivalents as at June 30. This had been strengthened by an oversubscribed $35 million institutional placement and $7.5 million share purchase plan, both of which occurred within the June quarter.
Bigtincan says it will use these funds to invest in its technology and pursue potential M&A opportunities, which means some exciting announcements could be on the horizon.
Should you invest?
Bigtincan isn’t quite the same growth company it was last year. In 2019, the Bigtincan share price soared more than 160%. So far this year – after all the share market volatility stemming from COVID-19 – its share price has only managed to gain 29%. This is still well short of its January high of $1.08.
However, the company’s underlying results have remained strong, and it has built a solid foundation for future growth despite tough market conditions. It anticipates customer retention rates to remain stable during FY20, and even reported some significant new customer wins in the most recent quarter – including one of the largest technology companies in the world.
There is even the potential for the ongoing impacts from COVID-19 to continue to drive growth. With people continuing to work remotely, there could be sustained high demand for digital solutions for activities such as staff training, coaching and ongoing development.
There are obvious risks to an investment as well. Bigtincan is still a small company with a market cap of only $335 million. With most economic indicators pointing to a severe downturn lurking on the horizon, small-cap growth stocks aren’t quite the exciting investment opportunity they were 12 to 18 months ago.
However, Bigtincan joins a growing list of junior ASX tech companies, like internet communications company MNF Group Ltd (ASX: MNF) and software developer Objective Corporation Limited (ASX: OCL), that are showing their ability to adapt – and even thrive – in the challenging conditions created out of the COVID-19 global pandemic.
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Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends BIGTINCAN FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Objective Limited. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended BIGTINCAN FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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