KYP research note and valuation - 30 cents

Keen to hear others thoughts on the below is the link to the RAAS research on KYP.

KYP Kinatico RaaS Update Report 2025 01 21.pdf

Here is the summary -

Summary of Kinatico's Q2 FY25 Performance and Valuation:

1. Revenue Performance:

   • Q2 FY25 revenue: $7.6M, with $3.5M (46%) from SaaS customers.
   • SaaS revenue grew 47% YoY and 15% QoQ.
   • Total revenue rose 7% YoY, despite a 15% decline in transactional revenue.
   • H1 FY25 revenue: $15.6M, with $6.5M (42%) from SaaS, in line with forecasts.

2. Annualized SaaS Revenue:

   • Running at $14M, up from $12.1M in Q1, with positive momentum potentially exceeding the FY25 forecast of $14.6M.

3. Transactional Revenue:

   • Declining as forecasted, with a 10% YoY decline projected to $17.1M in FY25f.

4. DCF Valuation:

   • Valuation: $0.30/share (fully diluted) based on a WACC of 13.2% (beta: 1.41, risk-free rate: 4.0%, terminal growth rate: 2.2%).
   • Implied EV/Revenue multiples:
     • 4.1x FY25f, 3.7x FY26f (DCF-based).
     • Current multiples: 1.8x FY25f, 1.6x FY26f.
   • Valuation gap could narrow with sustained SaaS growth, material new contracts, and positive free cash flow and operating profit.

5. Forecast Outlook:

   • Current forecasts remain unchanged but may be adjusted post-H1 FY25 accounts release next month.