Land and expand is great while the price of debt is cheap, when interest rates start moving up I think the market is waiting for some cost synergies and cross selling opportunities to outline themselves before getting in.
At that point I wouldn't be surprised if we were sitting at an ARR of 3-4 or a PE of 15-20 upwards of a market cap of $100mill in FY23+.
I don't understand your statement "earnings of $8mill per quarter" I think you mean to say revenue. Margins are definitely quality in the SME space and much larger than many telcomms going forward.
The importance of reliable and secure business interconnectivity has become even more prominent in a pandemic-impacted world, and so enterprises are placing greater priority on possessing and maintaining quality communication networks.
A risk that I can outline is just because the acquisition should benefit VN8 in the long-run doesn’t mean the market will enjoy the short term pain to the VN8 cash balance and shareholder dilution. Acquisitive strategies in no way guarantee that a larger telco will look to acquire VN8 in the end, particularly if user growth slows.
I think the market is waiting for the EBITDA results from the half yearly and the accounts to make their final investment decisions. We still haven't seen a full year with MNF Direct under VN8 yet so we look forward to continued progress here.
I'd think by mid-2022, both acquisitions should be fully integrated into VN8, and so the full impact on ARR, PBX customers and EBITDA will flow through to the financial reports.
VN8 Price at posting:
10.5¢ Sentiment: Buy Disclosure: Held
