While it is so difficult to find interesting software stocks (at...

While it is so difficult to find interesting software stocks (at a good price) in Australia, Ansarada (AND) is worth looking into more details.
It is a rather new stock on the ASX, as it was listed in Dec 20, via a back door listing.

80 % of their revenues comes from virtual data room, focused on capital market activities (M&A, IPO, debt restructuring...).
Basically it is a portal to exchange documents and confidential information for these activities.
Apparently mainly used by bankers, lawyers, asset managers, corporates...

By definition, the main weakness of this business is that it depends a lot on the volume of M&A deals.

Main reasons why it may look interesting now :
- despite the structural weakness indicated above, the company is showing good results, in term of growth, profitability* and cash flow/free cash flow,
- the valuation looks interesting with a free cash flow yield of 4 % based on last half year free cash flow (annualised).
Of course, we can still wonder if this result will be sustainable. However, it looks to be the case as it was achieved when the market for M&A has just begun to improve.

A possible inflection point for this company :
- the number of (paying) subscribers is again increasing in Q2 (after a decrease in 2023 and Q1 2024), due in particular to better M&A volumes,
- this increase in number of subscribers has been achieved despite a significant price increase** in October (between 7 % and 8 % on average),
- the sales increase from the 2 elements above will have a significant effect on the results as the company has a gross margin over 90 %.

The market may be missing the high level of growth of this company, as top line growth remains limited (around + 7 % in FY 23 and H1 24), but the (adjusted) EBITDA growth is significant : + 40 % in FY 23 and + 111 % for H1 24, explaining the strong growth of the cash flow.


Also interesting to have a look at a recent update from Mopoke.
https://www.mopokecloud.com/p/deep-dive-product-led-growth-at-ansarada



* the company has already reached a high level of margin (90 %+ for gross margin and adjusted EBITDA margin over 20 %).
Margins are a bit misleading as the company capitalise part of their development costs
** only for new customers.