Following the company’s first quarter results, Echelon Wealth Partners analyst Ralph Garcea is maintaining his bullish stance on Trakoplis (Trakoplis Stock Quote, Chart, News: TSXV:TRAK).
On May 30, Trakopolis reported its Q1, 2018 results. The company lost $1.3-million on revenue of $1.6-million, a topline that was up nine per cent over the same period last year.
“The first quarter of 2018 focused on channel expansion, business development, as well as significant expansion of our solution offering. This is aligned with our strategy for continued revenue growth across all verticals and positions the company well for the remainder of 2018,” CEO Brent Moore said.
Garcea says the quarterly results revealed robust subscription growth.
“TRAK announced Q118 revenue of $1.6M (EWP: $1.7M), Adj. EBITDA of ($0.5M) (EWP: ($0.2M)), and EPS of ($0.05) (EWP: ($0.02)),” the analyst notes. “Subscription revenue was $1.2M, up 36% y/y, and 76% of Q1 revenue. Gross margin was a very robust 59.2% versus our 51.9% estimate, reflecting the revenue mix in the quarter which was mainly subscription revenue versus hardware dominated in recent quarters (hardware revenue turns into recurring/maintenance revenue in the future). TRAK reported net additions of 477 subscribers (total subs of 16,022), representing 3% growth q/q and 29% y/y with average revenue per unit (ARPU) of $25.30, representing -1% growth q/q and 7% y/y. The enterprise subscriber base was 40% of the subscriber base vs 29% y/y.”
In a research update to clients today, Garcea maintained his “Speculative Buy” rating and one-year price target of $1.50 on Trakopolis IoT, implying a return of 100 per cent at the time of publication.
Garcea thinks TRAK will post EBITDA of negative $2.6-million on revenue of $11.2-million in fiscal 2018. He expects those numbers will improve to an EBITDA loss of $200,000 on a topline of $14.0-million the following year.
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