Coca-Cola Amatil Ltd (ASX: CCL) is one of the largest bottlers in the Asia Pacific region. This $9 billion Australian beverage business spans Australia, New Zealand, Fiji, Indonesia and Papua New Guinea, and also belongs to a network of independent companies connected to The Coca-Cola Company (NYSE: KO).

Coca-Cola Amatil operates as an authorised bottler and distributor of the US Coca-Cola Company. As part of its recent investor presentation the Australian arm released unaudited third quarter results, with group revenue and volume down 4.2% and 5.4% on the prior corresponding period – a result that is relatively unsurprising given the impact of the coronavirus pandemic. What is surprising is that it has also received a $9.3 billion takeover offer from Coca-Cola European Partners (NYSE: CCEP).

The deal has been labelled as opportunistic by Coca-Cola Amatil shareholders, who think the bid offer does not take into account the bottler’s third quarter recovery (compared to the first half). Independent shareholders will receive $12.75 per share in cash, less final 2H20 dividends paid, subject to approval from shareholders and regulators.

The Coca Cola Amatil share price jumped more than 16% after the announcement. Let’s look at the reasons for the takeover bid and Coca-Cola Amatil’s future prospects, assuming the deal is approved.

The refranchising strategy of The Coca-Cola Company

The Coca-Cola Company announced its plan to refranchise bottling operations in 2016 to focus on building brands and developing products.

The Coca-Cola Company holds a nearly 31% stake in Coca-Cola Amatil and a 19% stake in Coca-Cola European Partners. Coca Cola European Partners was formed in 2016 by 3 European companies with a market capitalisation of $17.4 billion. If the takeover proceeds, the Coca-Cola Company will hand over its shares in Coca-Cola Amatil to Coca-Cola European Partners.  

Under the proposed takeover, Coca-Cola Amatil will shed expensive, global bottling operations to become a more nimble, less capital intensive and more profitable beverage business.

Premium brands with higher profit margin

The Coca-Cola Company has been developing a new business model of higher prices, smaller packages and premium brands to deliver modest volume growth but greater profitability. One way this can be achieved is by bringing together 2 Coca-Cola bottlers.

The takeover will provide access to a broader and more balanced geographic footprint for consumer reach, especially the company’s non-alcoholic ready to drink (NARTD) products (including Coca-Cola no sugar, energy drinks and juices).

National NARTD volume in Australia grew 1.9% in the first 3 weeks of October compared to the declining sales in alcohol and coffee products, according to the company’s recent investor briefing. I think this space is the growth driver for the company, as consumers are becoming more health conscious amid the pandemic.

Foolish takeaway

From a business perspective, I can see the strategic rationale of a takeover to deliver value to Coca-Cola Amatil’s shareholders.

The COVID-19 pandemic presents a perfect time for Coca-Cola European Partners to go ahead with this transaction, which creates a cross-border platform for accelerated growth and returns.

More reading

• Xplore Wealth share price surged to a 2-year high today on M&A fever
• 3 ASX stocks are outperforming today after brokers upgraded them to “buy”
• ASX 200 was mixed today, ends down 0.2%
• Coca-Cola Amatil (ASX:CCL) share price jumps 16% on takeover bid
• ASX 200 up 0.3%: Coca-Cola Amatil rockets on takeover approach, Westpac’s $1.2bn earnings hit

Motley Fool contributor Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the shares mentioned. 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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The Tesserent Ltd (ASX: TNT) share price soared as high as 10% this morning following a strong quarterly announcement. The Tesserent share price faced selling pressure however, and is currently up 4.05% at the time of writing. Here is the rundown of its quarterly update. 

Tesserent earnings 

The internet security-as-a-service provider delivered strong Q1 revenue of $15.1 million, up 42.5% from the previous quarter. Q1 revenue included two months of revenue from Seer Security and one month’s revenue from both Airloom and Ludus. All three were acquisitions that the business made in mid-late FY19. 

With the addition of full quarter revenue from all three acquisitions as well as full quarterly revenue from its most recent acquisition iQ3, subject to audit, the group’s current revenue run-rate is now in excess of $100 million. This is anticipated to increase to more than $150 million by the end of FY21 on a quarterly annualised basis with continued organic growth and the completion of planned future acquisitions. 

The company continues to build its high-value recurring annuity revenues with multi-year, locked-in managed security services (MSS) and security operations centre (SOC) contracts now exceeding $30 million. 

A cash flow positive business 

Q4 FY20 saw Tesserent achieve quarterly earnings before interest, tax, depreciation and amortisation (EBITDA) and operational cash flow positivity for the first time in its history. The company has been able to maintain its trend in profitability with Q1 increasing operational profit to $405,000, up from $17,000 from the previous quarter. It expects to continue this growth trend for the foreseeable future.

Additionally, the company maintains a healthy cash balance of $13.76 million available at the end of September. This will provide the balance sheet flexibility it needs to pursue additional acquisitions. The quarterly update notes that there are a number of acquisitions in an ‘advanced stage’. 

Business integration update 

The business continues to identify and realise cross-selling opportunities across its business units resulting in a number of notable wins in the quarter. This includes: 

• New federal, state and local government contract wins across the group in excess of $6 million in the September quarter 
• Significant enterprise contract wins in aggregate in excess of $4 million in September with large financial services, insurance, advertising and media organisations 
• 14 cross-selling wins in September from the recent acquisitions 
• Growing pipeline of opportunities and wins across business units leveraging Splunk service and capabilities 

Moving forward 

The company’s primary objective moving forward is to maximise shareholder value by increasing earnings margins through the growth of its high-margin annuity-based income and the inclusion of proprietary intellectual property in its solutions. 

The quarterly highlights important goals for the remainder of this current financial year including capturing market share in government, critical infrastructure and banking & finance, exploring international market opportunities and integrating its acquisitions. 

More reading

• The niche ASX shares critical to fuelling the tech boom
• Why the Tesserent (ASX:TNT) share price has surged 18% today

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) has given back its morning gains. The benchmark index is currently flat at 5,960.7 points.

Here’s what is happening on the market today:

ResMed smashes expectations.

The ResMed Inc (ASX: RMD) share price is surging higher today after smashing expectations in the first quarter. The medical device company reported a 10% increase in revenue to US$751.9 million. This compares to the market consensus estimate of US$709.47 million. Also beating expectations was its earnings per share, which grew 37% to US$1.27. The market consensus was US$1.03 per share. A key driver of ResMed’s result was strong demand for ventilators because of the pandemic.

AMP takeover news.

The AMP Limited (ASX: AMP) share price is rocketing higher today after management confirmed that Ares Management has tabled a takeover bid to the embattled wealth manager. No figures have been provided for the indicative and non-binding takeover proposal, but investors clearly appear to believe it will be a compelling offer. Management has warned that talks are at a very preliminary stage and there is no certainty that a transaction will eventuate.

Tech shares tumble.

Despite a strong night of trade on the tech-focused Nasdaq index, Australian tech shares have been tumbling lower today. The S&P/ASX All Technology Index (ASX: XTX) is down 1.3% at the time of writing, with the likes of Appen Ltd (ASX: APX) and Zip Co Ltd (ASX: Z1P) weighing on the index at lunch.

Best and worst ASX 200 performers.

The best performer on the ASX 200 today by some distance is the AMP share price. Its shares are up 21% at the time of writing following the takeover approach. The worst performer has been the Western Areas Ltd (ASX: WSA) share price with a disappointing 18% decline. This morning the nickel producer downgraded its production guidance and increased its costs guidance due to issues at Flying Fox.

More reading

• Why Bigtincan, Bubs, Carsales, & Western Areas are dropping lower
• Sezzle (ASX:SZL) share price charges higher on Q3 update
• Why the AMP (ASX:AMP) share price could be set to rocket higher today
• Takeover talks puts AMP (ASX:AMP) share price in focus
• ResMed (ASX:RMD) share price on watch after smashing Q1 expectations

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended ResMed, Appen, and Zip Co. The Motley Fool Australia owns shares of A2 Milk. 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a positive note. At the time of writing, the benchmark index is up 0.3% to 5,977.6 points.

Fours shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

Bigtincan Holdings Ltd (ASX: BTH)

The Bigtincan share price is down over 7.5% to $1.22 following the release of its first quarter update. That update revealed that the AI-powered sales enablement automation platform provider’s customer cash receipts fell 15% to $4.5 million. Positively, management has held firm with its guidance for FY 2021.

Bubs Australia Ltd (ASX: BUB)

The Bubs share price has fallen over 2% to 69.5 cents. This follows the release of the infant formula and baby foods company’s first quarter update. For the three months ended 30 September, Bubs reported a 34% decline in gross revenue to $9.4 million. Management blamed the decline on a COVID-led contraction in the daigou channel.

Carsales.Com Ltd (ASX: CAR)

The Carsales share price has dropped 4% to $20.79 on the day of its annual general meeting. Ahead of its virtual meeting, the auto listings company released a presentation which included a trading update. Management advised that lead volumes in the first quarter have been impacted by the closure of dealerships in Metro Melbourne. However, excluding Metro Melbourne, overall lead volumes grew strongly on the prior corresponding period.

Western Areas Ltd (ASX: WSA)

The Western Areas share price has crashed 19% lower to $1.90 after updating its guidance for FY 2021. According to the release, the nickel producer has downgraded its production guidance range from 19,000 to 21,000 tonnes to between 17,000 and 19,000 tonnes. This will be achieved with higher than expected costs. Its unit cash cost of production guidance has been lifted by 25 cents to A$3.50/lb to A$4.00/lb. Production issues at Flying Fox are to blame.

More reading

• Bubs (ASX:BUB) share price tumbles lower on sales drop and cash burn
• Why the Bigtincan (ASX:BTH) share price is sinking 7% lower today
• 5 ASX tech shares that could be the next WAAAX stocks
• 5 things to watch on the ASX 200 next week
• Got $1,000? You should buy one of these 8 ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO, Carsales, Bigtincan. The Motley Fool Australia owns shares of A2 Milk. 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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The Southern Cross Media Group Ltd (ASX: SXL) share price price is up 2.94% to 17.5 cents in morning trade today. The jump follows the company’s AGM this morning and comes amid a broader upbeat in market trading today. 

The company announced some negative news about its performance in FY20, which was already expected by analysts.

Highlights from Southern Cross’s AGM today

• The company acknowledged that FY20 has been a difficult year for Southern Cross, citing COVID-19 as the most significant factor affecting its performance.
• Full year revenue of $540.2 million was 18.2% lower than the prior year.
• Earnings before interest, tax, depreciation and amortisation (EBITDA) of $93.0 million was 36.9% below the comparable amount in the prior year.
• The metropolitan free-to-air radio advertising revenue decreased 25.3% year on year. Regional radio performed somewhat better, but was also down by 13.1% compared to 2019. In contrast, revenues from digital audio streaming and podcasting doubled to $7.1 million.
• The television business delivered EBITDA of $19.5 million which is 40.5% lower compared to prior year.
• The company emphasised the importance of digital radio and podcasts to its future plans, and will aim to divert its resources to these platforms.

Quick take on Southern Cross business

Southern Cross is a media provider that broadcasts programmed contents on free-to-air commercial radio, television, and online media platforms across Australia.

The company has 100 radio stations and 105 TV signals in both regional and metropolitan markets. It generates about 70% of its advertising revenue from radio and 30% from television.

Why the market has been tough for Southern Cross this year

Southern Cross’ business revolves around generating advertising revenue from marketers.

Advertising on free-to-air television has slumped significantly since the mid-2000s as advertisers follow eyeballs to digital platforms.

Although the radio industry is more stable, the same dynamics apply. Management admitted that listeners now have more choices especially with the increasing popularity of streaming services such as Spotify and Pandora.

At today’s AGM, chief executive Grant Blackley emphasised the urgent need for the government to review the current broadcasting regulations on free-to-air television in regional Australia. He noted that the current regulation “constrains the ability of incumbent operators to compete in the internet era”.

Analysts have often said that the advertising industry is highly cyclical and fickle. Advertisers spend big when the economy is booming, but might eliminate their entire marketing budget at the slightest hint of a downturn. 

How the Southern Cross share price performed

The impact of coronavirus on Southern Cross has been severe, given the financial pressure that most advertising clients are under. This has been reflected in Southern Cross share price YTD.

The Southern Cross share price has declined by about 70% this year. It traded as low as 10.5 cents in March, before bouncing back to today’s level at 17.5 cents per share at the time of writing.

The broader ASX Communications Services Sector Index (ASX: XTJ) is down 10% YTD.

More reading

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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Hours before the Myer Holdings Ltd (ASX: MYR) AGM yesterday, the chair, Garry Hounsell, retired from the ailing retailer. Mr Hounsell had been under intense pressure to resign by Solomon Lew, chair of  Premier Investments Limited (ASX: PMV). The Myer share price increased 2.17% by the close of business yesterday. In addition, at the time of writing, it has already risen by 4.35% in early trading today.

The decline of the Myer share price

With 10.8% ownership of Myer, Premier has long been a critic, indicating it would vote against re-election of the chair. However, the deciding moment came when Wilson Asset Management, with 7.8% ownership, also indicated it would vote against the re-election. Nonetheless, the Premier chair has continued his criticism, saying in a statement.

Mr Hounsell’s ousting signals to the entire board that their time is up.

In the interests of all shareholders, we expect the remaining Myer directors will now indicate their intention to step aside in an orderly manner or face an extraordinary general meeting at which they will be certainly dismissed.

For the sake of all of Myer’s dedicated employees, its many hardworking suppliers, its loyal but frustrated customers, and of course its long-suffering shareholders, the company needs to be restored to health by installing a new, independent board.

In its annual report, the Myer board announced a statutory loss for FY20 of $172.4 million last month. This was the second largest loss in the storied company’s history. Consequently, the Myer share price entered a period of volatility. Mr Lew has been calling for the resignation of the entire board since then. Wilson Asset Management chair, Mr Geoff Wilson, has stated that the company should revisit the number and remuneration of its directors.

Mr Hounsell’s resignation comes after two other directors had already confirmed in September they would not seek re-election on pressure from Mr Wilson. The salaries of the board had also been reduced. However, Mr Wilson was seeking further discussions on remuneration for directors of a company with a market capitalisation of $190 million.

What happens next?

Mr Wilson has indicated that he doesn’t support an extraordinary general meeting for a full spill of the board. Moreover, Mr Wilson has previously allied with other large shareholders to resist Mr Lew’s 2018 attempt to roll the board. 

Acting chair, JoAnne Stephenson, a former KPMG partner, called for unity during the AGM. The company is fast approaching its peak season during Christmas, and Mr Wilson in particular believes tipping the entire board out at this time would prove too disruptive. Ms Stephenson believes it is essential that the management team is able to focus on the period from Black Friday through to the January stocktake sale. 

The Myer share price has been in inexorable decline for over a decade. Chief executive, John King, continues to negotiate with landlords to reduce floor space by at least another 60,000 square metres.

More reading

• ATO: Stop using JobKeeper to pay for fat bonuses and dividends
• Leading brokers name 3 ASX shares to sell today
• These are the 10 most shorted shares on the ASX
• 5 things to watch on the ASX 200 on Monday
• These are the 10 most shorted shares on the ASX

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. 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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The Bubs Australia Ltd (ASX: BUB) share price has come under pressure on Friday following the release of its first quarter update.

At the time of writing, the infant formula and baby food products company’s shares are down over 2% to 69.5 cents.

How did Bubs perform in the first quarter?

Bubs has had a difficult start to the new financial year and reported a sizeable decline in revenue during the first quarter.

For the three months ended 30 September, Bubs delivered gross revenue of $9.4 million. This was down 34% from $14.21 million in the prior corresponding period. Management blamed the decline on a COVID-led contraction in the daigou channel, which impacted sales of its Adult Goat Milk Powder products.

Nevertheless, Bubs Infant Formula sales across all channels grew 9% on the prior corresponding period. A key driver of this was sales into Australian major grocery and pharmacy retailers, which were up 29% over the same period last year.

Total China direct export gross sales rose 25% to $2.6 million, representing 27% of group quarterly revenue. Whereas sales to international markets outside of China came to just $758,000 for the quarter. This was down 33% from $1.14 million a year earlier. It represents 8% of quarterly sales.

This ultimately led to Bubs posting an operating cash outflow of $10.146 million, which was greater than its revenue for the quarter. But thanks to the $32.1 million it raised from investors at 80 cents per share in September, Bubs finished the period with cash reserves of $42.6 million.

What else did Bubs say?

The company revealed that it has launched its Vita Bubs products into 400 Chemist Warehouse stores in October. This is a new range of eight Children’s Vitamin and Mineral Supplements.

Management advised that opening B2B orders have exceeded expectations.

Executive Chairman, Dennis Lin, commented: “As planned, the Vita Bubs range of children’s vitamin and mineral supplements launched on-shelf in Chemist Warehouse stores nationally in October. We are now onto our subsequent production runs to fulfil anticipated export orders across China, Vietnam, Malaysia and Hong Kong. This is a truly exciting development and demonstrates our ability to launch into adjacent high margin categories that leverage our brand and core competencies in new consumer nutritional needs and consumption occasions.”

No guidance has been given for the first half or full year.

More reading

• Got $1,000? You should buy one of these 8 ASX shares
• I think the Bubs (ASX:BUB) share price is a steal
• Why it makes sense to invest in ASX shares
• Where I’d invest $20,000 into ASX shares right now
• This is where I’d invest $1,000 right now into ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO. The Motley Fool Australia owns shares of A2 Milk. 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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The COVID-19 stock market crash may have lowered the appeal of dividend stocks for some investors. They may be concerned about a second downturn this year, or feel that having larger amounts of cash is beneficial in a challenging economic period.

However, low interest rates mean that saving money could lead to disappointing returns in the long run. At the same time, high yields and the potential for dividend growth could lift stock prices higher. Over time, income shares could help to bring your retirement date a step closer.

Low interest rates on cash savings

Dividend stocks currently offer a higher return than cash savings. This is partly due to low interest rates that have been around for a number of years. However, the prospect of rising interest rates now seems to be somewhat more distant than it was at the start of the year. A weak global economic outlook means that policymakers may retain an accommodative monetary policy over the medium term. This could lead to continued low returns from cash savings.

Saving money may even lead to a negative return once inflation is factored in. This could be very detrimental to your retirement prospects. It could even lead to a loss of spending power if inflation rises and interest rates remain low. This would make it more difficult for anyone with cash savings to retire early.

Return prospects from dividend stocks

While dividend stocks may have produced poor returns this year, their low valuations suggest that they offer impressive long-term prospects. Weak investor sentiment and an uncertain economic environment mean that some income shares have a potent combination of a high yield and a low valuation. This could lead to impressive total returns that improve your long-term financial prospects.

Although there are ongoing risks to the stock market’s near-term performance, its track record is exceptionally strong. It has always recovered from every previous downturn to post new record highs. As such, investing in a range of income shares today could provide you with the opportunity to obtain a worthwhile passive income now, as well as make capital gains on your investment over the coming years.

Dividend growth opportunities

While many dividend stocks may not increase their shareholder payouts this year, history suggests that they are likely to do so as the economy recovers. Following previous economic difficulties, such as the global financial crisis, dividend growth was relatively slow in some industries. However, as trading conditions pick up and economic growth strengthens, dividends have often followed suit.

This outcome may seem unlikely right now, but rising dividends are set to feature in the subsequent period of economic recovery. This could further improve your return prospects and increase your chances of building a nest egg that brings retirement a step closer.

More reading

• Bubs (ASX:BUB) share price tumbles lower on sales drop and cash burn
• CBA (ASX:CBA) busted raising credit limit for problem gambler
• Why the Bigtincan (ASX:BTH) share price is sinking 7% lower today
• Why the Splitit (ASX:SPT) share price is pushing higher today
• Sezzle (ASX:SZL) share price charges higher on Q3 update

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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Commonwealth Bank of Australia (ASX: CBA) has been fined $150,000 for breaching responsible lending laws.

The Federal Court this month found the bank violated the National Consumer Credit Protection Act 2009 in a case involving a customer that self-reported as a problem gambler.

An Australian Securities and Investments Commission (ASIC) investigation revealed that the customer regularly took cash advances out of his three CBA credit cards to feed his gambling habits.

Once the habit was identified as a problem, the three cards were consolidated into one.

But in a later phone call, a CBA staff member told him the bank had conditionally granted a credit limit increase.

“I do not really understand why they’ve offered me that considering they know, clearly see that I use it for gambling and stuff like that,” the customer said during that October 2016 call.

“I think that it’s pretty bad of them to offer me that when I clearly have a gambling problem.”

The court took that conversation as notification from the customer to CBA that he had a problem that needed to be fixed before any credit limits should be allowed.

However, the bank failed to formally record the notification and the information did not flow to its credit analysis systems. 

Customer breaks down with depression and anxiety

Two further credit limit increase offers came to the customer within a few weeks of that conversation with pre-filled forms. 

The customer succumbed to the increases in January 2017 and continued to “max out” the card for gambling purposes.

The customer, who worked as a roofer, started working 6 to 7 days a week to try to pay off his debts. He became physically and mentally exhausted, being prescribed sleeping tablets and suffering from depression and anxiety.

Even at this point, Justice Bernard Murphy said CBA was still unresponsive to the customer’s issues.

“In approximately August 2017 a CBA staff member called Mr Harris to ask why he was not making repayments. In that telephone call Mr Harris raised a complaint with CBA including by referring to the Problem Gambler Notification,” read the judgment.

“He pointed out that even after that notification CBA had continued to offer him credit limit increases. After about three weeks Mr Harris had still not heard anything from CBA in relation to this complaint. That led him to lodge a second complaint with CBA by telephone.”

CBA admits fault

CBA admitted in court that the breaches were caused by “inadequate systems and processes in respect of problem gambler notification”.

The bank has since negotiated hardship arrangements with the customer. CBA has also set up measures to address problem gambling and help customers manage their credit card expenses.

The $150,000 fine was calculated with the bank’s cooperation with ASIC and its admissions in court in mind.

The Motley Fool has contacted CBA for comment.

More reading

• Takeover talks puts AMP (ASX:AMP) share price in focus
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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The Bigtincan Holdings Ltd (ASX: BTH) share price is sinking lower on Friday following the release of its first quarter update.

At the time of writing, the AI-powered sales enablement automation platform provider’s shares are down 1% to $1.23.

How did Bigtincan perform in the first quarter?

Bigtincan had a soft first quarter but delivered a result in line with its own expectations.

For the three months ended 30 September, the company recorded customer cash receipts of $4.5 million. This was down 15% on the prior corresponding period. It also included government grants of $0.5 million, up from $0.1 million a year earlier.

No explanation was given for the decline in cash receipts compared to the prior corresponding period. Furthermore, management advised that it saw no impact on payment terms from enterprise customers, nor did it have extended potential bad debt exposure.

Also rising compared to the prior corresponding period was Bigtincan’s cash costs. They came in at $11.5 million for the quarter, which was up over 35% from the first quarter of FY 2020.

Nevertheless, the company finished the period with a very strong balance sheet. Its cash and cash equivalents stood at $63 million at the end of September. Management believes this leaves it well-placed to execute its growth plans.

Outlook.

Bigtincan remains on track to meet the market guidance it provided with its FY 2020 full year results.

This is for annualised recurring revenue of $49 million to $53 million and revenue of $41 million to $44 million with stable retention.

In addition, management notes that the International Data Corporation (IDC) Worldwide Digital Transformation Spending Guide shows that the digital transformation of business practices, products, and organisations is predicted to continue at a solid pace. This is despite challenges presented by the COVID-19 pandemic.

It commented: “This focus on digitization and Bigtincan’s unique strength in mobility, provides the Company with opportunities for tailwinds going into FY21. Bigtincan’s ability to address counter-cyclical market sectors (life sciences, technology, telecommunications), was demonstrated over the past quarters, with new customers and expansions in Technology, Financial Services and Life Sciences.”

More reading

• 5 ASX tech shares that could be the next WAAAX stocks
• Looking for the next big thing? Check out these exciting ASX tech shares
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• Why ARB, Accent, Bigtincan, & Transurban shares are dropping lower today
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends BIGTINCAN FPO. The Motley Fool Australia owns shares of and 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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