Net's Hockey Stick

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It’s been almost a year since we suggested buying Netcall (LSE: Net) and the shares back to the same price and report Interims are Thursday 27th of February.
Netcall is a software as a service company, helping  clients engage effectively with their customers. There was a substantial growth in its cloud business with several new notable multi-year contracts. It recently launched ‘Liberty Create’ an in-platform test studio that allows clients to integrate test studios for apps to innovate faster by consolidating the application development lifecycle so changes can be tested so increasing the software quality and speed to market.
Netcall’s Low-code platform uses drag and drop technology that enables organisations to scale and rapidly develop, test and deploy digital enterprise applications. This empowers business users and IT developers to collaboratively develop products and systems that create a leaner, more customer-centric organisation. Netcall’s customers base covers enterprise, healthcare and government sectors. These include two-thirds of the NHS Acute Health Trusts, major telecoms operators such as BT, and leading corporates including Lloyds Banking Group, ITV and Nationwide Building Society.

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As it moves from a traditional software business to a high growth digital cloud (Low-code) operation, turnover growth is no longer the key metric as this is sticky repeat high margin (90% GPM) business with blue chip customers. January’s trading statement anticipated an 8% increase in revenue to £12.3m  while EBITDA  increases to £2.1m.

Netcall’s software  sales should be highly operationally geared, scalable and easy to deploy and use for enterprises. The Low-code market is worth more than an estimated $6 billion and is expected to grow rapidly in the coming years. Michael Jackson, the chairman recently brought shares at 34p.

 

Financials

It’s cash positive  and after paying a £1.7m installment for an acquisition the cash balance was £6.5m at the 31st December which offset debts of £6.7m.
Trading Strategy
We hope for clear evidence at the  interims of a ‘hockey stick’  effect on  earnings  and then  Netcall could again be a takeover target. Buy 
NetCall (LSE: Net)
37.5p (36-39p)
Mkt Cap: £54m
Next Results: Interims Thursday 27th February

Last OMG! price 35.5p

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