Wishpond Technologies has a 233 per cent upside, says Beacon

Beacon Securities analyst Gabriel Leung delivered an update to clients on Thursday on Canadian marketing tech company Wishpond Technologies (Wishpond Techologies Stock Quote, Charts, News, Analysts, Financials TSXV:WISH) where he reviewed WISH’s first quarter results. Leung said it was a strong start to the year with more growth to come, and he reiterated a “Buy” rating on the stock and $2.00 target price, which at press time represented a projected one-year return of 233 per cent.

Vancouver’s Wishpond Technologies is a SaaS-based provider of marketing-focused online business solutions. The company reported its Q1 2023 numbers on Thursday, featuring revenue up 38 per cent year-over-year to $5.6 million and gross profit up 45 per cent to $3.7 million. The company hit positive adjusted EBITDA of $209K, which compared to last year’s Q1 at negative $441K.

Quarter highlights for WISH included being presented with five industry awards from Gartner Digital Markets for popularity and performance in the marketing tech space, along with the launch of Propel IQ, the company’s next-gen marketing platform, in March. Wishpond also launched its AI-powered Website Builder for small-to-medium businesses, while subsequent to the quarter’s end, WISH completed the acquisition of business management software company Essential Studio Manager.

“Our outlook remains positive for 2023, with the launch of new AI-powered products, continued organic growth and potential for new acquisitions.  We expect to see continued sales growth, positive Adjusted EBITDA, and positive cash flows for this year,” said Chairman and CEO Ali Tajskandar in a press release.

Looking at the quarterly results, Leung said the $5.6 million and $209K top and bottoms compared to his forecast at $5.6 million and $22K, respectively. He noted that while revenues were down 4.8 sequentially, that’s a comparison with the seasonally strong fourth quarter. Organic growth in the Q1 was about 30 per cent year-over-year, Leung said, while EBITDA margins were 3.7 per cent.

“The company reiterated that it has not been hindered by macroeconomic challenges and that it expects to achieve record revenues and operating cash flows in CY23 driven by organic growth from ramping up sales of the company’s new Propel IQ bundled product offerings, increasing the size of its sales team and new product introductions,” Leung wrote.

Leung said WISH exited the quarter with about 45 sales reps and aims to bring the number to 70-80 by the year’s end, with a focus over the near term on retraining staff on the new Propel IQ platform. The retraining could cause Q2 revenue to dip below the company’s 30 per cent year-over-year growth target, according to Leung.

“We continue to expect the launch of the all-in-one Propel IQ platform to be an important growth catalyst this year (should help to increase MRR, add new customers and increase retention), along with new AI applications such as Website Builder, which can help SMBs launch a website within minutes using AI technologies,” Leung said.

Further ahead, Leung is forecasting 2023 and 2024 net revenue of $25.2 million and $31.5 million, respectively, and 2023 and 2024 adjusted EBITDA of $1.5 million and $2.1 million, respectively.

Disclosure: Wishpond Technologies is an annual sponsor of Cantech Letter.