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magazineIMImobile to emerge a digital winner
As global commerce increasingly goes digital and multi-channel we expect mobile customer engagement, marketing and commerce specialist IMImobile (IMO:AIM) to emerge as a digital winner.
What really sets the company out from other mobile hopefuls is its consistency, racking up growth in revenue, earnings before interest, tax, depreciation and amortisation (EBITDA) and pre-tax profit, all while throwing off impressive amounts of cash.
Cashed up
‘IMImobile remains easily the standout performer in the mobile-focused peer group, generating solid growth, margins and cash flow,’ spelled out Megabuyte analyst John McCaul following first half results on 15 November.
Those figures showed substantial progress, revenue up 29% to £36m, of which 16% was organic. It delivered 14% organic improvement in gross profit. Monthly recurring and repeating revenue accounts for 94% of this amount.
EBITDA increased 17% to £5.3m and adjusted pre-tax profit was £3.3m. There is now £17.9m in the bank to fund future growth, likely through a combination of platform investment and acquisitions.
Naira nag
The only fly in the ointment was FX, particularly the Nigerian naira as the currency de-coupled from the dollar. Management reassure that just 6% of its business is in Nigeria and IMImobile works with clients in 60 nations worldwide.
It’s also worth noting that much of the company’s focus for the rest of the year to 31 March 2017 will be on accelerating opportunities in the US, where dollar strength tailwind could help offset currency headwinds elsewhere, and in South East Asia.
The company has a great customer base that ‘does business year in and year out,’ says Cantor Fitzgerald analyst Kevin Ashton, including Vodafone (VOD) and IBM (IBM:NYSE).
IMImobile also provides enterprise software solutions that address a real need, such as connecting telco back office functions and banking apps to customers across a sea of network operators, devices and geographies.
Scope for upgrades
This suggests that the company is capable of doing better than the unchanged earnings per share (EPS) performance Investec anticipates in the current financial year. Its 10.5p estimate factors in the impact of the weaker naira. It forecasts 11.1p the year after, which looks too conservative in our view. (SF)
IMImobile (IMO:AIM) 158.5p
Stop loss: 127p
Market value: £95.8m
Prospective PE Mar 2017: 15.0
Analyst price target: 210p (Investec)
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