ProntoForms has a 35 per cent upside, PI Financial says

ProntoForms (ProntoForms Stock Quote, Chart TSXV:PFM) is showing signs of recurring revenue growth, says analyst David Kwan of PI Financial, who on Friday reiterated his “Buy” rating and $0.70 target price.

Mobile workflow solutions company ProntoForms announced last week that one of its clients — a Fortune 500 company in the industrials sector with revenue above $30 billion — is expanding its platform contract with ProntoForms to $1.75 million. The initial contract, which was announced last June, was worth $1.2 million. (All figures in US dollars unless noted otherwise.)

“This expanded deployment is another positive sign that our enterprise expansion strategy is working,” said ProntoForms CEO Alvaro Pombo in a press release.

Kwan says the increased commitment from the Fortune 500 client positions PFM well to win additional business with the company. The analyst likes the progress ProntoForms is making with its clients and takes the new announcement as a positive for it.

“PFM continues to make progress with enterprise customers, with the success being a key contributor to the reacceleration of (recurring) revenue growth to the 30 per cent-plus year-over-year range,” says Kwan in an earnings update to clients.

Ahead of PFM’s fourth quarter 2018 financials this week, Kwan is expecting $3.3 million in revenue and an Adjusted EBITDA loss of $0.4 million. Kwan says that the increased spend from the Fortune 500 company doesn’t change his estimates but gives more comfort to them. He is calling for fiscal 2018 revenue and Adjusted EBITDA of $12.1 million and negative $1.8 million and fiscal 2019 revenue and Adjusted EBITDA of $16.0 million and $0.0 million.

Kwan’s C$0.70 target represented a return of 34.6 per cent at the time of publication.