Solium Capital is showing its technological edge, says Canaccord Genuity

Enterprise software company Solium Capital (TSX:SUM) held its annual Synergy user conference in Boston last week, with Robert Young of Canaccord Genuity in attendance. The analyst says that the general customer consensus at the event was that Solium’s Shareworks platform offers a technological edge over the competition.

Calgary-based Solium is in the midst of completing conversion of customers for key partners Morgan Stanley and UBS Financial to its equity plan management platform. In a company update to clients on Wednesday, Young said that through conversations at Synergy, he found Morgan Stanley representatives to overall be happy with the progress so far.

“Our discussions with Morgan Stanley representatives echo some of the guidance we have received from Solium management,” the analyst says. “Migrations are expected to be completed before the end of 2019, with some of the more complex or sizeable customers getting pushed out to the back end of the timeline. We believe that this could enhance Solium’s growth prospects as the relationship matures, and we do not see any indication of obstacles or roadblocks at this point.”

“A summary of sentiment might be that customers see Solium as the best option in the space. Equity plan administrators commented on the scalability, unparalleled analytic capabilities, and education programs as some of the differentiators of the Shareworks product,” the analyst said. “The largest shared complaint appeared to be tax mobility issues – something that Solium is working to improve.”

Young says representatives from private companies like Uber, Slack and Levi’s all commented on the flexibility of Solium’s software in handling private company equity plans, which the analyst took as indication that the company was making strides in terms of supporting user experience. In 2017, Solium facilitated over 218,000 transactions worth US$9.3 billion across 19 countries and 15 different exchanges.

“Even though clients think of Solium as having a competitive advantage technologically, Solium has not become complacent with its leading design,” says Young. “The push to mobile is currently a major focus for Solium. Management has stated that it wants all functionality to be available on mobile in the next 12 months. Additionally, the company rolled out a clean new UI that addresses previous concerns among customers.”

Young’s “Buy” rating and C$12.75 target price remain unchanged. The target represents a projected return on investment of 14.9 per cent at the time of publication.