Fourth quarter financials from Computer Modelling Group (Computer Modelling Group Stock Quote, Chart TSX:CMG) have gotten a positive review from analyst Elias Foscolos of Industrial Alliance Securities.
The analyst’s take was delivered in a client update on Thursday which reiterated his “Strong Buy” rating, citing significant improvement in the company’s deferred revenue.
Calgary-based CMG, a reservoir modelling and simulation software business, released its fourth quarter and fiscal 2019 year end results on Thursday, reporting revenue of $21.1 million and Adjusted EBITDA of $9.3 million, both of which were above Foscolos’ estimates at $17.6 million and $7.2 million, respectively. The analyst says that the EBITDA beat was primarily due to increased revenue offset partially by higher costs.
CMG finished the year with $35 million in deferred revenue, on par with the deferred revenue of fiscal 2018. The company maintained its dividend at $0.10 per share per quarter, while its cash balance fell approximately $9.5 million on a year-over-year basis.
“CMG reported Q4/F19 revenue of $21.1 million which exceeded both our forecast and the consensus projection,” says Foscolos. “This revenue beat led to EBITDA of $9.3 million, also bettering our forecast and consensus.”
“Most important, deferred revenue sharply rebounded from Q3/F18 which bodes well for Core Maintenance and Annuity revenue for F2020 and CMG reported two additional CoFlow sales. Finally, CMG maintained its $0.10 per share quarterly dividend despite a minor shortfall in FFO. Weighing all the news, particularly the rebound in deferred revenue and the additional CoFlow sales, we classify the results as Positive,” he says.
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