ProntoForms has triple-digit upside, says Industrial Alliance

Following ProntoForms’ (ProntoForms Stock Quote, Chart, News: TSXV:PFM) recent fourth quarter results, Industrial Alliance Securities analyst Blair Abernethy remains optimistic about the company’s future.

On Thursday, ProntoForms reported its fourth quarter and fiscal 2016 results. In the fourth quarter, the company lost $1.01-million on revenue of $3.01-million, a topline that was up 10 per cent over the same period last year.

“Our 31-per-cent growth in recurring revenue in 2016 was driven by our direct channel, which grew at 64 per cent and now accounts for 54 per cent of recurring revenue,” said CEO Alvaro Pombo. “Our strategy is to maintain the rapid growth of our direct channel using additional resources and leverage the increasing lead flow provided by strategic partners. Sales to the operator channel were steady at 6-per-cent growth. We’re solidifying our technology leadership through investments in automated workflows, analytics and cloud-to-cloud integration support. These evolving capabilities not only increase the value of our solution to our growing customer base, they also provide a compelling case for partnerships with leading application providers.”

Abernethy says the results were essentially in-line with his expectations, with revenue missing the $3.3-million he had modeled by a touch. The analyst says 2017 should be a good year for the company.

“Over the next year, we expect the Company to continue to demonstrate strong organic revenue growth and track towards EBITDA profitability in the medium term as it continues to build new channels to market,” says the analyst. “In 2017, we see several potential positive catalysts for ProntoForms’ stock, including large direct sales enterprise wins, quarterly recurring revenue growth acceleration, traction with new channel partners, and tuck-in product or customer-base acquisitions.”

In a research update to clients Friday, Abernethy maintained his “Speculative Buy” rating and one-year price target of $0.75 on ProntoForms, implying a return of 114.3 per cent at the time of publication, including dividend.

Abernethy thinks ProntoForms will post an Adjusted EBITDA loss of $2.8-million on revenue of $15.2-million in fiscal 2017. He expects these numbers will improve to an EBITDA loss of $1.5-million on a topline of $19.7-million the following year.