Versapay’s (TSXV:VPY) second quarter results are evidence that the company is on the cusp of a major opportunity, says Cantor Fitzgerald Canada analyst Justin Kew.
Last Friday, VersaPay reported its Q2, 2014 results. The company lost $706,050 on revenue of $4.8-million, up 11% from the $4.4-million topline the company reported in last year’s Q2.
“We are pleased with our results in Q2, especially with respect to the record results achieved by our POS Merchant Services business and our progress launching the Arc product into the market,” said CEO Craig O’Neill. “The strong results from our POS business continue to support the strategic investment we are making in Arc as we build the foundation for future growth. After a good start in Q1 we have remained on course meeting our business objectives for Q2: enhancing the Arc team with top software talent, winning additional customers, going live with two major partners, rolling sales training out across Heartland’s U.S.-wide sales force and improving our direct sales capabilities.
Kew, noting that VersaPay’s Q2 revenue was the highest it had posted in eight quarters, says the results beat his expectations. Importantly, he says all the growth the company experienced was due to its Point-of-Sale business. He says that while it is still early days for the company’s Arc product, “all the factors for high growth are in place”. Kew believes VersaPay now has a “massive” addressable market, limited competition and low penetration of accounts.
In a research update to clients Friday, Kew maintained his “Speculative Buy” recommendation, but increased his one-year target price on the stock from $1.70 to $1.75, implying a return of 40% at the time of publication.