Redknee (TSX:RKN) this morning announced that a tier one North American service provider had selected the company’s cloud-based billing platform. The contract was described in today’s press release as a “…multimillion-dollar, multiyear-term licence.”
Lucas Skoczkowski, Redknee’s CEO said: “The signing of this converged billing contract achieves a significant milestone in Redknee’s growth strategy, which focuses on increasing its footprint in Tier 1 and Tier 2 markets across the globe.” He added: “The launch of Redknee’s solution for this Tier 1 operator highlights the value that an integrated, end-to-end, cloud-based converged billing and customer care solution delivers to service providers by enabling them to develop new, innovative brands, capture market share and increase revenue.”
M Partners analyst Ron Shuttleworth says Redknee management has long hinted at the possibility of contracts in excess of $5-million. He believes now that Redknee has established a reference with a tier 1 network, there is a greater possibility of more large term deals to come. Shuttleworth’s model already assumes approximately $9M of new revenue next year, which brings his topline estimate to $69M. In a research update to clients this morning, Shuttleworth maintained his BUY rating on Redknee and upped his twelve-month price target to $1.85 from his previous target of $1.70.
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Founded in the solarium of Skoczkowski’s apartment in 1999, Mississauga-based Redknee now boasts clients such as Microsoft and Cisco. The company’s billing solutions run the gamut from the customer side to helping service providers better monitor, understand and monetize their subscriber base. Redknee’s real-time converged billing solution has been benchmarked to support a quarter of a billion subscribers.
Shuttleworth says the unnamed client is probably not a US major because, in his experience, the minimum revenue guarantees would be higher. This does not take away from the fact, he says, that this contract was earned in head-to-head, feature to feature competition against large business support system vendors such as Amdocs, and Convergys and CSG Systems.
At press time, shares of Redknee were up 8.5% to $1.28.