ProntoForms gets price target raise to $0.55 at Beacon Securities

Following the company’s second quarter results, Beacon Securities analyst Gabriel Leung has raised his price target on ProntoForms Corporation (Quote, Chart TSXV:PFM).

This morning, PFM reported its Q2, 2018 results. The company lost (US) $673,814 on revenue of $2.91-million, a topline that was up 20 per cent over the same period last year.

“The 5-per-cent sequential growth we recorded in the second quarter extended the rebound in our revenue growth to 20 per cent over prior year,” CEO Alvaro Pombo said. “The accelerating growth rate in recurring revenue is a result of stronger sales execution in accounts of all sizes combined with reduced overall churn. Our enterprise strategy continues to be focused at engaging larger enterprises who can provide continued growth and longer committed contract length. Our platform has the key attributes that major global enterprises require, including scalability, security and cloud integrations. Our annual recurring revenue (ARR) base now includes 12 customers that contribute more than $100,000 of ARR each, representing 23 per cent of the base, up from four customers representing 9 per cent a year ago. This growth comes from both new enterprise customers and significant expansion from existing customers. We have also formalized arrangements with important channel partners and this is bringing us to opportunities where enterprise grade cloud-based mobile workflows are needed.”

Leung says this quarter was better than what he had modeled, noting the improvements in gross margin and recurring revenue

“Overall, we are buoyed by the strong recurring revenue growth and what appears to be stabilization in operator channel revenues,” the analyst says. “At the current pace of growth, we believe the company is on track to hitting cash flow break even some time in 2019. We view this milestone, along with continued enterprise traction as representing important catalysts for the stock.”

In a research update to client today, Leung maintained his “Buy” rating, but raised his one-year price target on ProntoForms from $0.50 to $0.55, implying a return of 45 per cent at the time of publication.

Leung thinks PFM will generate EBITDA of (All figures USD) negative $2.2-million on revenue of $11.6-million in fiscal 2018. He expects those numbers will improve to EBITDA of negative $1.4-million on a topline of $13.2-million the following year.