Adhir Kadve of Eight Capital is ready to set sail with Voyager Digital Ltd. (Voyager Digital Stock Quote, Chart, News, Analysts, Financials CSE:VOYG), maintaining a “Buy” rating and raising his target price from C$20.00/share to C$31.00/share for a potential return of 47 per cent in an update to clients on Wednesday.
Founded in 2018 and headquartered in New York City, Voyager Digital is a digital asset focused agency broker and financial services firm, first being publicly listed in the opening quarter of 2019 before adding iOS and Android apps to its arsenal before the end of that year, later adding a desktop app at the end of 2020.
Kadve’s latest analysis comes after Voyager released first quarter financial results for its 2022 fiscal year, which Kadve noted to be in line with expectations, while also providing optimistic guidance in regards to upcoming quarters.
The company’s fiscal Q1 was headlined by revenue of $65.6 million (all report figures in US dollars except where noted otherwise), which fits comfortably into the projection ranges of both Eight Capital and the consensus at $64.7 million and $62.6 million, respectively. That topline does not directly account for revenue brought in by Coinify, originally acquired in August, which when included lifts the total revenue to $81.5 million for the quarter.
Meanwhile, adjusted EBITDA came in at a loss of $43.8 million, significantly off from the consensus projection of a $9.8 million loss, and the Eight Capital estimate of a $13.9 million loss, and cash from operations also missed the mark, as Voyager reported a $28.3 million loss compared to the consensus expectation of an $11 million loss and the Eight Capital estimate of a $13.2 million loss.
“As we exit September and reflect on the growth of our platform, we’re glad to report that our Company is stronger than ever,” said Steve Ehrlich, CEO and Co-founder of Voyager in the company’s November 16 press release. “Although the global crypto industry saw reduced volumes in the September quarter, our strategic decision to invest in customer acquisition and retention during that period has paid off as it resulted in a significant increase in downloads and a rise in the app rankings. That coupled with the volume uptick in the first half of the December quarter has Voyager well-positioned to exceed our June quarter record revenues in this quarter.”
In addition to the financial results, Voyager also announced the rollout of the Voyager Debit MasterCard, which Kadve noted will act as a key customer acquisition tool for Voyager with an aim to attract the retail crypto user and incentivize current verified users to sign on and transact with the platform.
The company’s press release noted that the crypto-based debit card will pay up to nine per cent annual rewards to Voyager customers, as well as additional rewards for Voyager Loyalty Program members. The card appears to be popular off launch, as Kadve noted that over 1,000 users had already pre-registered for the card, with a phased rollout expected to begin in January as it tries to encourage more of its members to fund their accounts; according to Kadve, 1.7 million of the 2.7 million Verified Users on the platform have not funded their accounts, which would add to the $7 billion in assets already under Voyager management.
The updated reports have prompted Kadve to modify some of his financial projections, as he now projects revenue tripling to $533.8 million for the full 2022 fiscal year, a significant jump from the $353.5 million he had previously estimated, with an expectation for quarterly revenue to start reaching triple digits in the next report with management guidance projecting $125 million and increasing from there.
However, with the significant miss in this quarter, Kadve has also reduced his adjusted EBITDA projection to $3.2 million from the previous $77.9 million target, producing a margin of less than one per cent.
The only valuation multiple included in Kadve’s report is EV/Sales, which he projects to drop from the reported 16.4x in the 2021 fiscal year to 5.4x in 2022.
“Voyager continues to deliver on a well-defined user acquisition strategy which is rooted in increasing marketing spending, product rollouts and geographic expansion,” Kadve said. “We have increased our target price on increased forecasts on the back of updated guidance the company issued and we are maintaining our BUY Rating.”
Since it began trading on the Toronto Stock Exchange on September 7, Voyager Digital’s stock price is up 7.4 per cent from its initial listing price of $18.85/share, albeit with a slight dropoff over the last week after soaring to a new high of $25.17/share on November 9, which came after the stock bottomed out at $11.28/share on October 26.