Pelatro Share Discussion Threads

[gleach23] 08/12/2021 15:13

I did the same earlier jbarcroftr. Just listened back to the Investor Meet Company presentation and along with the increasingly high proportion of ARR they are also operationally cash positive with no need for a fresh raise unless an acquisition opportunity arises.

[jbarcroftr] 08/12/2021 11:46

Just averaged down
Probably foolish but seems unduly depressed
Management must consider taking it private

[daz] 22/11/2021 13:21

A significant contract win has been announced this morning.

The exact length of the contract isn't stated but if it were for 4 years that would mean annual revenue of $250,000, which makes a useful dent in the revenue growth needed to make next years forecast

[cordwainer] 22/11/2021 13:20

Forward p/e is approx. 15.7 based on today's buying price and expected revenues and assuming the same margin as H1. I guess recent contract wins should also put FY2022 current expectations at approx $7.8m up from $7.2m expected for FY21 assuming customer retention and similar amount of change request work.

Expectations for FY21 grew steadily from about $6m to $7.2m through the year, so investors might consider some further growth expectations for FY22, say between $8m and $9m revenue. The analyst forecast I can see on Simply Wall St for FY22 is $8m but that was last updated in June.

Although the p/e seems low for a software company I guess that's because individual contract wins into the global telco market are relatively uncertain and significant and create 'lumpy' range of expectations. However, I'm starting to feel more confident that the risk is to the upside here.

[cordwainer] 12/10/2021 12:25

I held and traded a bit since July 2019 and carrying a 15% paper loss as of this moment. The pace of sales and new contracts has been mortifyingly slow imho.

Maybe the telco market is just slow and lumbering in general. Glimmer of hope from the interims ..

"..we have engaged with one corporate in the financial services sector and hope to provide our software to analyse its proprietary data. We expect to see further progress with non telco customers in the coming months and look to the future with confidence."

Hope it doesn't just develop into an excuse for another heavily discounted placing though.

[daz] 05/10/2021 10:19

After listening to the IMC presentation, I have reservations that the CEO is involved in 2 companies. While he says that there is no conflict of interest currently, that could change in the future.
However the company trades on about 5.2 times the expected recurring revenue this year, which looks good value

[gleach23] 05/10/2021 07:59

Yup - it's the contract wins we need now to put momentum back into the share price - which can be (temporarily!) very strong based on past experience.

Looks like we are about to come out of the current mini auction @ 44-45 with only 1k currently available on the Offer so perhaps PTRO is about to embark one of those runs upwards. Fingers crossed.

[rivaldo] 05/10/2021 06:45

Good to see another contract win - at $600k over 3 years it's relatively small, but strategically significant since it could lead to much larger business from the "large European telecom group":

[bwana mkubwa] 30/9/2021 09:23

Just bought some more of these, this guy appears to be a fan of this share (from Master Investor);

[rivaldo] 29/9/2021 09:40

Thx for the full ST tip gleach23.

Here's a new interview with the CEO - nothing revelatory AFAICS, but definitely positive vibes:

[daz] 29/9/2021 07:58

As announced today, Pelatro are presenting next week on Investor Meets Company, which gives the opportunity to ask questions as well as listen to what the company have to say

[gleach23] 28/9/2021 20:27

Yes, thanks reapz. Looks like it was released after the bell today so hopefully we'll see some upside tomorrow.

I wasn't able to read below the first para using the link but the article is publicly available so posted below -

Aim-traded Pelatro (PTRO:39.5p), a company that makes its money by providing 19 large telecoms operators with precision marketing software, has delivered a step change in profitability and completed its move to an annual recurring revenue (ARR) model. This materially de-risks the investment case and means investors are far more likely to attribute a higher valuation to its growing income stream.

Pelatro uses 'big data' analytics (artificial intelligence, machine learning and other analytical techniques) to reveal patterns, trends, associations and behavioural traits of telecom subscribers. These insights enable mobile telecom operators to monetise their data, boost average revenue per user and their share of subscriber spend while also reducing churn rates.

In the first half, the group leveraged its position with one of its large Asian telcos, which has 230m subscribers, whereby Pelatro will now be paid a fixed amount each quarter for all its base products (including annual maintenance support and ad-hoc change requests), thus creating a valuable ARR stream. Incremental revenue of US$100,000 from the contract for the 2021 financial year is expected to ramp up to US$500,000 from 2022 onwards under the three-year agreement. In addition, the group won a recurring revenue campaign management contract with another Asian telco that should generate US$1.5m of revenue.

Existing customers have also been active in purchasing additional modules such as enterprise contract lifecycle management (automates and streamlines contract processes during key stages) and change requests, which combined will produce US$1.5m of revenue this year. Pelatro is benefiting from its share of client revenue gains above minimum contractual payments, too.

So, with the cost base relatively fixed, and revenue scaling up, the operational leverage of the business model is kicking in. First half cash profit surged by 141 per cent to $1.66m to deliver adjusted operating profit of US$0.76m (loss of US$0.11m in first half of 2020) on 51 per cent higher revenue of $3.46m. Pelatro’s full-year guidance points to annual revenue increasing 80 per cent to US$7.2m, an outcome that more than supports house broker Cenkos Securities’ full-year cash profit estimate of US$2.5m.

On this basis, Pelatro’s enterprise valuation of £16m equates to a modest three times forecast revenue, almost all of which will be recurring or repeat business. That’s an incredibly low rating for the sector as the average rating for software companies operating Software-as-a-Service models is around eight to 10 times ARR. Furthermore, Pelatro is only being valued on nine times cash profit estimates to enterprise valuation, almost half the rating of finnCap’s Tech 40 Spec Software index. The valuation discrepancy is even more anomalous when you consider that the directors are working on a “strong pipeline that is expected to secure recurring revenue and lead to attractive growth in 2022.”

Cenkos’ expectation of 25 per cent annual revenue growth next year looks conservative to me especially as the directors are leveraging Pelatro's position in 'big data' analytics by entering the mobile advertising space, a market that is worth $100bn and one projected to grow to $221bn by 2024.

The shares have traded sideways since my last article (‘Marketing re-rating potential, 21 June 2021), and I see material upside to my 100p target price. Strong buy.

[daz] 28/9/2021 20:01

Thanks for posting the link reapz2345

The mention of one contract being paid quarterly explains the receivables if this is common practice.
the same contract ramping up from $100,000 now to $500,000 in 2022 means a substantial chunk of next years revenue increase is already in the bag and if they do announce a few more customer wins before the end of the year, it starts to look very achievable.

[reapz2345] 28/9/2021 17:36

Simon Thompson giving a STRONG BUY to 100p. £1 incoming!

[daz] 28/9/2021 13:35

A bit of a mixed bag for me.
They burnt just over $1m in cash in the half, mainly due to capitalised development costs as Rivaldo mentions above, so the placing was partly to shore up the balance sheet.
Also, trade receivables remain uncomfortably high at $3.72m despite the move to recurring revenue.

Revenue growth of around 50% and a pipeline of $18m are very encouraging and they hope to sign a few more customers before the end of the year, which would set them up for a good 2022, so I'd hope the current revenue forecast for 2022 of $9m gets beaten.

[gleach23] 28/9/2021 09:21

Good summary Rivaldo. Certainly taking time! Nice to see what looks like a 415k buy just go through @ 41.5p

[rivaldo] 28/9/2021 06:40

I rather like today's interims. It seems to me that with recurring revenues now up to 70%, and $1.61m EBITDA, the company's turnaround is taking shape nicely.

There is $1.39m of capitalised development expenditure, so one could argue that the EBITDA figure is a little bit of a mirage. But PTRO are investing large sums in the mobile advertising space etc which from the narrative might not take long to pay dividends.

This is now a £17m m/cap which is well funded going forward and with decent, and increasing, revenue visibility. The CEO has done this all before, and whilst it's taken longer (much longer!) than hoped, these could be the first stirrings....

[daz] 22/9/2021 07:34

I picked up a few more yesterday, the interims are due next week and I think there is a good chance they will announce further revenue gains, which would mean they have exceeded the forecast for this year

[hew] 06/9/2021 12:09

I'm another continuing to hold. At a loss but looking to better things for 2022 and some share price recovery ahead of that - if/when the advertising venture starts to show life, even without material 2021 revenue. I find it hard to disagree with ST's recent comment that I noted as "Cenkos’ 2022 Rev estimate of $8m starting to look far too conservative - already $16m contracts in pipeline."

[boadicea] 06/9/2021 11:25

Crispfin - Sensible strategy imo. I similarly limit an opening position in such shares to ~2% of the portfolio.

[crispfin] 06/9/2021 10:03

A bit underwhelmed by the trading update and still have an open question on management but I feel that at £18m market cap, there is an acceptable risk/reward profile here.

They have real revenues, and if they can get any real traction on either the core product or the advertising product, I can’t believe they won’t create value in excess of that £18m figure.

I have this as an option sized position - low single digit % of the portfolio. No intention to add at present, but no intention to sell either.

[p1nkfish] 06/9/2021 10:03

When you buy someting like this you are buying the future growth. It may be fine but looks very lumpy to me and not a steady play up and to the right. Buying what is already in the bag is a concern.

The run ups have been to lower highs too.
Will watch.

[sidam] 06/9/2021 09:35

Well, the year end is December so there are a few months to win more orders. The guidance for this year excludes anything from mobile advertising, but the brokers think there is a possibility for some. The trading update was optimistic on
mobile advertising space. Cenkos postulate revenues of $25m within a few years of which half could come from mobile advertising at a 33% margin.

That looks to me to be growth. If you think there is no growth, why hold?

I think there will be growth as above and am a firm holder. I might even buy a few more.

[p1nkfish] 06/9/2021 07:14

Agreed, nothing new signed the way it reads so where will growth come from in a supposed growth stock and how to justify a growth rating?