Trakopolis is undervalued, Echelon Wealth says

Following a new customer win, Echelon Wealth Partners analyst Ralph Garcea is reiterating his bullish take on Trakopolis IoT (Trakopolis IoT Stock Quote, Chart, News: TSXV:TRAK).

On Wednesday, Trakopolis announced that an unnamed Texas-based oil field services company had purchased 60 of its ConneXt LoneWorker subscriptions.

“The ConneXt LoneWorker solution that Trakopolis and Honeywell have created brings both safety and productivity together to provide unrivalled insight and oversight to customers with at-risk employees where every minute matters and every dollar counts,” said CEO Brent Moore. “We are pleased with the short sales cycle with this new customer as our channel enablement focus continues to evolve and our average revenue per unit (ARPU) trends upward.”

Garcea says he expects Trakopolis’s winning streak will continue.

“This was a customer win via a channel partner and was noted by a short sales cycle (~45-60 days),” the analyst notes. “We expect monthly average revenue per user (ARPU) and annual recurring revenue (ARR) from this win to be in the $75-100 range, which yields annual revenue contributions from this contract win in the ~$55-72K range. Recent monthly ARPU has been in the $25 range. The win does include a one-time hardware component, which we estimate at ~$45-65K. With a focus on safety and productivity, TRAK’s ConneXt LoneWorker solution is certainly generating interest in the Oil & Gas (O&G) vertical, with O&G representing 44% of revenue in Q317. We expect continued market traction of TRAK’s ConneXt LoneWorker solution in the quarters to come. We note that TRAK has an exclusive global agreement with Honeywell — the global leader in gas detection equipment.”

In a research update to clients today, Garcea maintained his “Speculative Buy” rating and one-year price target of $1.50 on Trakopolis.

Garcea thinks Trakopolis will generate Adjusted EBITDA of negative $2.9-million on revenue of $9.6-million in fiscal 2017. He expects those numbers will improve to EBITDA of negative $2.2-million on a topline of $11.4-million the following year.

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