GetBusy – I really like this loss-making group with massive upside
This little £29m company has an annualised recurring revenue of 93% and, what is more, it enjoys a 99.8% net revenue retention rate.
It must be an absolute dream for its Finance Director as the group progresses to expand both in size and internationally.
The Cambridge-based GetBusy (LON:GETB) group, is a leader in productivity software for the professional and financial services sector.
On Wednesday 13 July this loss-making group will be reporting its interim results to end June this year.
That is a somewhat tight turnaround in reporting its figures that should put many finance directors to shame.
We already know that the group’s management is highly confident of achieving market expectations.
It knows where its money is coming from, with over 73,000 paying users of its services.
The group is an established SaaS business, which helps to drive higher its high-quality ARR, which thousands of company bosses would find enviable.
That 93% figure has been driven by buoyant customer demand across the group's established brands, the continued benefit from monetisation initiatives and by its healthy net revenue retention levels.
Its Products and Services
The company’s specialist productivity software solutions enable growing businesses to work securely and efficiently with their customers, suppliers and teams anytime, anywhere.
Its solutions can be delivered flexibly across cloud, mobile, hosted and on-premise platforms, whilst integrating seamlessly with a wide variety of other class-leading core business systems.
The group develops and sells document and task management software products.
It offers ‘Virtual Cabinet’, a document management and client portal software for insurance managers, financial advisors, accountants, property agents, insolvency practitioners, and professional services.
Its ‘SmartVault’ solution, is a cloud-based document management and storage software.
The early-stage developing ‘Workiro’, is a software that works with documents, which features document and task management, client portal, e-signatures, and integration.
And finally, the newcomer ‘Certified Vault’ is offered for authoritative copies of digital assets.
Its Sales Breakdowns
The group’s sales are made in the UK (44.9% of 2021’s revenues), the US (42.0%), Australia, and New Zealand (13.1%).
On a sales per business basis Virtual Cabinet made up 55.7% of the 2021 results, Smart-Vault was 44.1%, while the Workiro was only 0.2% of the total.
The Latest AGM Statement
The early May AGM Statement by the group, saw Daniel Rabie, the CEO, stating that:
"We are pleased to report that the significant groundwork we laid last year in supporting our ambition to at least double the business over five years is bearing fruit, with an acceleration of ARR, up 19% year-on-year. This provides the Group with enhanced revenue visibility and the resources to continue to invest in its expanding capabilities.
"GetBusy has an enviable mix of established productivity products with strong track records and prospects that underpin our growth, complemented by innovative emerging offerings that carry the potential to significantly enhance growth in the future."
He went on to state that
"Sizeable, under-penetrated markets and compelling macro trends, including digital transformation, cyber security, privacy legislation and hybrid working are driving more and more organisations to seek technology solutions, such as ours, to help them work better and smarter, providing us with significant growth opportunities.
The Group's broadening capabilities, growing traction in new markets and continued double-digit growth in high quality recurring revenues gives the Board confidence in delivering on our ambition and generating long-term value for all shareholders."
The company’s Management has already clearly indicated that it expects to see group revenue of not less than £17.0m and an adjusted EBITDA approaching break-even for the current year to end December.
In fact, it has reaffirmed its expectations with a very high level of confidence.
There are some 49.58m shares in issue.
Larger holders include Clive Rabie (18.6%), BGF Investment Management (14.3%), Gregory Wilkinson (7.4%), Canaccord Genuity Wealth (7.0%), Herald Investment Management (5.9%), HSBC James Capel as Principal (4.9%), River & Mercantile Asset Management (4.0%) and Daniel Rabie, CEO (3.2%).
Recently the group appointed Panmure Gordon as its NOMAD and broker, we shall see whether that is a good move.
Analyst William Larwood at Liberum Capital, the group’s former broker, rates the group’s shares as a ‘buy’ looking for them to trade up to 130p, compared to the current 58p.
In early May upon the group announcing its AGM Trading Update Larwood reckoned that the shares, then 60.5p, were trading on a 35% discount to its peer group.
His estimate for the current year to end December is for sales to improve from £15.4m to £17.0m, while the pre-tax loss may rise by £0.1m to £1.3m negative.
For the coming year he sees sales up again at £18.6m while easing the loss back down to £1.2m off.
This time last year saw the group’s shares hit 99p, since when they have been down to as low as 55p in the ‘tech-stock rout’.
I think that this little loss-maker has some really massive upside.
It is constantly proving that its subscription business model has proven that it is inherently resilient to the challenges that many other businesses are currently facing.
Just think of that ever-increasing annual recurring revenue, with the group showing sustained double-digit growth in ARR.
As a leader in its marketplace, it has compelling drivers, with a very scalable SaaS business, which enjoys high gross margins.
The group has an ever-growing customer base, from which it earns an average revenue per user of £216. And that figure will be growing too.
The GetBusy business currently has a broadly neutral operating cashflow, which in the near-term will be moving to significant cash generation.
We have already won through with my first Profile Target and my recent Profile objective is not so far away now.
The company’s shares at the current 58.5p look to me to be an excellent medium-term investment offering substantial growth potential.
(Profile 05.05.20 @ 60p set a Target Price of 75p*)
(Profile 11.02.22 @ 68p set a Target Price of 85p)
(Asterisks * denote that Target Prices have been achieved since Profile publication)