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Last close As at 04/02/2023
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Research: TMT
SenSen continued its run of record quarterly cash receipts, which rose 128% y-o-y and 117% q-o-q to A$3.7m. Notably, the company secured contracts worth at least A$3.8m across all four business verticals and multiple geographies. These wins provide recurring, higher-margin revenues, boosting annualised recurring revenue (ARR) towards c $8m as it made solid progress in transitioning to a ‘pragmatic SaaS’ model. The results support our estimates and if SenSen continues this trend of growing ARR and winning contracts across multiple verticals and geographies, we believe it could reduce the valuation gap versus peers.
SenSen Networks |
Multiple contract wins across all four verticals |
Q422 cash flow update |
Software and comp services |
25 July 2022 |
Share price performance
Business description
Next events
Analysts
SenSen Networks is a research client of Edison Investment Research Limited |
SenSen continued its run of record quarterly cash receipts, which rose 128% y-o-y and 117% q-o-q to A$3.7m. Notably, the company secured contracts worth at least A$3.8m across all four business verticals and multiple geographies. These wins provide recurring, higher-margin revenues, boosting annualised recurring revenue (ARR) towards c $8m as it made solid progress in transitioning to a ‘pragmatic SaaS’ model. The results support our estimates and if SenSen continues this trend of growing ARR and winning contracts across multiple verticals and geographies, we believe it could reduce the valuation gap versus peers.
Year end |
Revenue (A$m) |
Adj EBITDA* |
PBT** |
EPS** |
P/sales |
Net cash/ |
06/20 |
3.8 |
(2.8) |
(3.7) |
(0.85) |
13.5 |
0.7 |
06/21 |
5.5 |
(2.2) |
(2.9) |
(0.61) |
9.2 |
3.9 |
06/22e |
9.3 |
(8.1) |
(11.6) |
(1.99) |
5.4 |
3.5 |
06/23e |
16.4 |
(3.3) |
(5.6) |
(0.85) |
3.1 |
(0.7) |
Note: *Adjusted EBITDA excludes non-cash share-based payments. **PBT and EPS are normalised, excluding amortisation of acquired intangibles, other income and exceptional items. ***Net cash/(debt) is cash less debt and leases.
Q422: Another record quarter of cash receipts
SenSen reported yet another quarter of record cash receipts of A$3.7m, growing 128% y-o-y and 117% q-o-q. Net cash used in operating activities was A$1.3m, down from Q322’s A$2.1m, as the higher cash receipts offset ongoing investments. We estimate that SenSen will end FY22 with A$3.5m in net cash (including leases), due to cash receipts, ongoing cost reduction efforts and a A$1.5m draw on the working capital facility, expected by management to be paid back in October 2022.
Contracts worth at least A$3.8m across all verticals
The company’s successful ‘land and expand’ strategy continued driving growth, with contract wins in Q422 worth a minimum of A$3.8m from FY23 across all four of its business verticals and multiple geographies. The wins include a new five-year contract with City of Adelaide for mobile parking enforcement, rolling out its SenGAME solution to an additional 135 tables at Solaire Casino, and a three-year contract with Vibe Petroleum at an initial 26 sites for its fuel theft reduction solution. Notably, these contract wins grew SenSen’s ARR towards A$8m.
Valuation: Undervalued versus slower-growing peers
We have adjusted our forecasts to account for the increased short-term borrowings, likely higher COGS and opex due to inflation, and quarterly cash flows, moving the FY22e EBIT from A$10.2m loss to A$12.0m loss, and FY22e normalised EPS from a 1.67 cent loss to a 1.99 cent loss. SenSen trades at 3.1x price/sales for FY23e, a significant discount to its peers despite the company’s higher expected growth rates. Using the average peer price/sales multiple of 4.9x FY23e suggests a share price of A$0.12, a potential upside of 55%. If SenSen can maintain its momentum in new customer wins and success across geographies and verticals, we expect there could be a reduction in the gap.
Exhibit 1: Financial summary
A$000s |
2020 |
2021 |
2022e |
2023e |
2024e |
Year end 30 June |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
PROFIT & LOSS |
|||||
Revenue |
3,764 |
5,533 |
9,338 |
16,417 |
24,940 |
Cost of Sales |
(997) |
(2,030) |
(3,600) |
(4,763) |
(5,907) |
Gross Profit |
2,766 |
3,503 |
5,738 |
11,654 |
19,034 |
Other Income |
1,539 |
2,807 |
3,000 |
3,300 |
3,630 |
Oper. Expense (not incl. share-based payments) |
(7,567) |
(9,112) |
(18,006) |
(19,626) |
(21,558) |
Share-based payments (non-cash) |
(290) |
(72) |
(2,800) |
(1,500) |
(1,000) |
EBITDA |
(2,807) |
(2,243) |
(8,140) |
(3,267) |
2,520 |
Operating Profit (before amort. and except.) |
(3,534) |
(2,785) |
(11,390) |
(5,495) |
783 |
Intangible Amortisation* |
- |
(83) |
(675) |
(675) |
(675) |
Exceptionals |
(18) |
(6) |
(3) |
(2) |
(2) |
Operating Profit (EBIT) |
(3,552) |
(2,874) |
(12,068) |
(6,172) |
106 |
Net Interest |
(138) |
(142) |
(163) |
(98) |
(98) |
Other |
- |
- |
- |
- |
- |
Profit Before Tax (norm) |
(3,672) |
(2,927) |
(11,553) |
(5,594) |
684 |
Profit Before Tax (reported) |
(3,690) |
(3,016) |
(12,231) |
(6,270) |
8 |
Tax |
(15) |
(6) |
(73) |
(38) |
(2) |
Other |
- |
- |
- |
- |
- |
Profit After Tax (norm) |
(3,687) |
(2,933) |
(11,626) |
(5,631) |
683 |
Profit After Tax (reported) |
(3,705) |
(3,022) |
(12,305) |
(6,308) |
6 |
Average Number of Shares Outstanding (m) |
436 |
484 |
584 |
664 |
683 |
EPS - normalised (c) |
(0.85) |
(0.61) |
(1.99) |
(0.85) |
0.10 |
EPS - reported (c) |
(0.85) |
(0.62) |
(2.11) |
(0.95) |
0.00 |
Dividend per share (c) |
- |
- |
- |
- |
- |
Gross Margin (%) |
73.5% |
63.3% |
61.4% |
71.0% |
76.3% |
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
10.1% |
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
3.1% |
BALANCE SHEET |
|||||
Fixed Assets |
790 |
2,168 |
9,284 |
8,444 |
7,595 |
Intangible Assets |
- |
1,300 |
8,303 |
7,628 |
6,953 |
Tangible Assets |
353 |
391 |
505 |
340 |
166 |
Other |
437 |
477 |
476 |
476 |
476 |
Current Assets |
4,706 |
8,022 |
9,871 |
6,160 |
7,526 |
Stocks |
803 |
241 |
875 |
875 |
875 |
Debtors |
744 |
979 |
960 |
960 |
960 |
Cash & cash equivalents |
2,463 |
5,176 |
5,840 |
2,129 |
3,495 |
Other |
696 |
1,625 |
2,196 |
2,196 |
2,196 |
Current Liabilities |
(4,498) |
(3,640) |
(7,244) |
(10,924) |
(10,516) |
Creditors |
(1,095) |
(750) |
(1,500) |
(2,500) |
(2,700) |
Short term borrowings |
(1,313) |
(861) |
(1,894) |
(2,394) |
(1,394) |
Lease Liabs |
(235) |
(306) |
(300) |
(300) |
(300) |
Other |
(1,856) |
(1,723) |
(3,550) |
(5,730) |
(6,122) |
Long Term Liabilities |
(276) |
(244) |
(1,977) |
(1,426) |
(879) |
Long term borrowings |
- |
- |
- |
- |
- |
Lease Liabs |
(197) |
(138) |
(138) |
(138) |
(138) |
Other long term liabilities |
(79) |
(106) |
(1,839) |
(1,288) |
(741) |
Net Assets |
721 |
6,305 |
9,933 |
2,254 |
3,725 |
Minority Interests |
- |
- |
- |
- |
- |
Shareholder equity |
721 |
6,305 |
4,745 |
2,254 |
3,725 |
CASH FLOW |
|||||
Operating Cash Flow |
(2,884) |
(3,250) |
(7,793) |
(6,049) |
3,030 |
Net Interest |
(42) |
(127) |
(72) |
(98) |
(98) |
Tax |
(101) |
(31) |
(247) |
(38) |
(2) |
Capex |
(100) |
(253) |
(300) |
(300) |
(300) |
Acquisitions/disposals |
- |
- |
(1,127) |
- |
- |
Equity financing |
3,329 |
7,043 |
9,644 |
2,538 |
- |
Dividends |
- |
- |
- |
- |
- |
Other** |
288 |
(667) |
559 |
236 |
(1,264) |
Net Cash Flow |
490 |
2,714 |
664 |
(3,711) |
1,366 |
Opening net debt/(cash) w/o Leases |
(648) |
(1,150) |
(4,315) |
(3,946) |
265 |
HP finance leases initiated |
- |
- |
- |
- |
- |
Exchange rate movements |
- |
- |
- |
- |
- |
Other |
12 |
451 |
(1,033) |
(500) |
1,000 |
Closing net debt/(cash) |
(1,150) |
(4,315) |
(3,946) |
265 |
(2,101) |
Closing net debt/(cash) w/ Leases |
(718) |
(3,871) |
(3,508) |
703 |
(1,663) |
Source: SenSen, Edison Investment Research. Note: *Amortisation of acquired intangibles (patents). **Includes repayment of leases, proceeds from/repayment of borrowings, etc.
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