Wishpond Technologies wins Buy recommendation from Haywood

Haywood Capital Markets launched coverage on Monday on Canadian marketing tech company Wishpond Technologies (Wishpond Technologies Stock Quote, Charts, News, Analysts, Financials TSXV:WISH), with Haywood analyst Gianluca Tucci saying investors can expect accelerated organic growth from WISH.

Vancouver-based Wishpond is a leading provider of digital marketing solutions and has an integrated marketing suite called Propel IQ to handle marketing, promotion, lead generation, ad management, referral marketing, sales conversion and outbound sales automation.

The company was founded in 2009 by current Chairman and CEO Ali Tajskandar, who sees Wishpond’s raison d’être in helping small and medium-sized businesses (SMBs) streamline their marketing, with Propel IQ standing as a cost-effective alternative for marketing solutions. Wishpond has over 4,000 SMBs as customers across a range of industries and a subscription-based revenue model that Tucci says makes for good revenue visibility.

“Its business model is designed to address the complexity of the SMB market, the financial costs associated with implementation, the interoperability of comparable marketing tools, and being a solicitor in a highly fragmented industry,” Tucci wrote.

“Wishpond’s business model is built around historic organic growth of 30 to 40 per cent per year augmented by inorganic growth through tuck-in acquisitions of innovative marketing and sales technology companies,” he said.

Last month, Wishpond reported its first quarter 2023 earnings, which featured revenue up 38 per cent year-over-year to $5.6 million and positive adjusted EBITDA of $209K compared to negative $441K a year earlier. 

Management said in its commentary that the company hasn’t felt any material negative effects of the many current challenges, i.e., interest rate and inflationary trends, supply chain problems or macroeconomic effects.

“Wishpond’s performance is highly positive across all its businesses, with robust demand for its products.  Management is optimistic about the Company’s growth prospects,” the company said in a statement.

Tucci complimented Wishpond’s management and board, saying the company has an experienced team, led by seasoned start-up software engineer Tajskandar. 

In terms of growth prospects, Tucci said WISH has a very large total addressable market, where the global digital marketing market was valued at US$350 billion in 2020 and is expected to reach US$786 billion by 2026 for a CAGR of nine per cent.

The analyst said digital marketing software tools have become essential for companies wishing to connect with stakeholders through various channels like email, instant messaging and social networking. Moreover, where most competitors offer point solutions, Wishpond is among the very few companies offering a comprehensive, multi-faceted software suite with all the software functionality needed by SMBs to market their products online.

“The [Wishpond] platform provides a moat that developers of point solutions do not have,” Tucci said.

Tucci started WISH off with a “Buy” recommendation and $1.40 target price, which at the time of publication represented a projected one-year return of 119 per cent.

“WISH has established a solid track record of six acquisitions to date complemented by organic revenue growth. We believe the recent launch of Propel IQ will accelerate organic growth while the Company continues to hunt for accretive tuck in acquisitions,” Tucci wrote.

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