Seven things every investor needs to know about Checkit

Checkit is a SaaS business connecting, organising and empowering deskless workers. Although they account for the majority of our global workforce, the organisation of our non-desk based colleagues is still dominated by unconnected, inflexible and error-prone paper checklists. Checkit’s mission is to swap these grim but necessary management tools for connected, flexible and data-rich apps. 

Having recently issued its H1 results, here are the seven things every investor should know about Checkit:

#1: Edison sees upside in the stock
Checkit trades at a big discount to the UK software sector. Whist Checkit’s on an EV/sales multiple of 1.9x for FY22e, the sector average is 5.7x current year sales. Using a sum-of-the-parts methodology, our latest research suggests a per share valuation of 83p would be reasonable. Recent coverage also suggests that private investment is ramping up in the sector with news around WorkJam, Anthill and Tulip

#2: The segment’s potential should not be underestimated
Vibrant and seamless digital experiences have become an expectation of how we interface with desk-based work, leisure and entertainment services. As a result Microsoft, Apple, Google, Amazon, Facebook and Netflix are now listed businesses with trillion-dollar valuations – having written software that transformed the world. Yet deskless work has not been digitised. Checkit’s strategy is to deliver that transformation for hundreds of millions of deskless workers.

#3: Checkit has high profile customers
Working with BP and the UK’s NHS as foundation clients has helped accelerate Checkit’s mission. Already installed in hundreds of locations, the same Checkit software that ensures food-to-go prep is safe and served at optimum temperatures is also easing the flow of COVID vaccinations. The Checkit team says its cloud-based, no-code SaaS platform is extensible into every sector and scalable without limit, capable of capturing every meaningful data point.

#4: Checkit has a strong balance sheet
Our analysis shows its H1 revenues grew 13% with ARR at £6.6m, up 16% h-o-h. At the end of the period £8.5m of cash was in the bank. 

#5: The deskless revolution will create economic efficiency
Checkit does much more than just let the team know who the workers are, where they’re located right now, what they’re doing, which tasks have been assigned and still need to be completed. Real world states – such as timescales, temperatures and acidities – are also imported via clocks, probes and other IoT-connected devices. By making the details of all a company’s “dark operations” available in real time, analytics and insights unlock higher quality levels and great efficiencies. That should give the boards of Checkit customers the ammo to widen their own profit margins. Financial payback after a Checkit installation is often delivered within a few short months.

#6: Checkit’s pivot to subscriptions is progressing well
44% of last quarter’s revenue was of the recurring variety, finishing 32% up h-o-h. As non-recurring revenue dropped 35% y-o-y, Edison believes that whilst the subscription pivot is not yet complete, current figures suggest it is likely to be successful.

#7: We expect the market to catch up 
Given its financials, the installation of new CEO Kit Kyte and fresh blood in sales and marketing, Edison believes it is quite possible for Checkit’s stock to break out of its current trading range – a 52-week high/low of 65p/38.5p.

Thanks for reading. To deep dive into Checkit, read our latest research in full. Or visit the Checkit website, then sign-up for the webinar on ‘Dark Operations’.

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