Is Wishpond a buy right now?

Following the company’s first quarter results, Ventum Capital Markets analyst Jason Zandberg thinks there is still a lot of money to be made on Wishpond (Wishpond Stock Quote, Chart, News, Analysts, Financials TSXV:WISH).

On May 22, WISH reported its Q1, 2024 results. THe company posted Adjusted EBITDA of $290,304 on revenue of $6.05-million, a topline that was up 8% year-over-year.

“The first quarter of 2024 marked another historic chapter in the Company’s history as we successfully completed the development of our flagship, and much anticipated, SalesCloser AI product, which subsequently launched in April 2024,” CEO Ali Tajskandar said. “SalesCloser AI has generated immense interest within the industry, as we pioneer the future of sales calls and product demos through the use of artificial intelligence. We’re confident that SalesCloser AI will lead the charge in reshaping how companies engage with their stakeholders, heralding a new era of efficiency and effectiveness in sales processes. With the combination of our Propel IQ all-in-one marketing platform, and SalesCloser AI, Wishpond is poised for its next phase of growth. Despite the typical seasonal downturn expected in Q1-2024, I am pleased to report our revenues remained relatively stable in comparison to Q4-2023. In the first quarter, we achieved a 39% improvement in Adjusted EBITDA(1) compared to Q1 of last year, and we maintained our consistency in achieving our seventh consecutive quarter of positive Adjusted EBITDA. This improvement stems from the sustained momentum of our cost optimization initiatives initiated last year, coupled with the ongoing growth and profitability of Propel IQ. The Company’s outlook for the remainder of 2024 remains promising as the transition of our sales team to Propel IQ is now bearing fruit.”

Zandberg says this quarter was better than it appeared at first blush.

Wishpond revenue was slightly ahead of our forecast – C$6.1M vs C$6.0M. The year over year growth of 8% does not sound impressive, but it marks a change in direction. We expect WISH to continue to accelerate growth for the next 7 quarters. Part of the reason for the recent decline in growth has been the slow decline of one of its legacy customers. This customer used to be Wishpond’s largest customer but not only represents a small component of revenue (C$0.3M this quarter versus C$0.5M last year). We expect this customer will likely fall to zero while WISH ramps up sales of its Propel IQ solution.

In a research update to clients May 23, the analyst maintained his “Buy” rating and price target of $1.50 on WISH, implying a return of 177.8% at the time of publication.

Zandberg thinks WISH will post Adjusted EBITDA of $1.2-million on revenue of $25.3-million in fiscal 2024. He expects those numbers will improve to Adjusted EBITDA of $2.7-million on a topline of $30.9-million in fiscal 2025.