This little business - of which I'll bet 99.9999% of HotCopper members have never even heard - is travelling very well:
ARR is currently running at $9.4m , up from $6.1m in July 2021.
Of course, the subsequent Libero acquisition added ARR of $2.1m, so if one normalises for that addition, the pre-Libero ARR was $7.3m, which suggests organic growth in ARR around 20%.
(And that achieved during a period which was still Covid-disrupted.)
Valuation-wise, the current quarter is KNO's strongest cash flow period by far (KNO typically generates 10% or 20% more Operating Cash Flow in Sep quarters than the rest of the year combined (while the acquisitions made over the past 18 months are likely reduce the extent of that acute seasonality, the current quarter's cash flows can still expect to be meaningfully higher than the preceding 3 quarters).
View attachment 4554637So I expect the net cash balance to increase by around $1.0m, which would take it to above $4m.
The current market cap is ~$22m, so the EV is $18m.
That's an EV/ARR of just 1.9x - not at all demanding for 20% organic ARR growth.
This little business, like so many other nano-cap emerging tech stocks, has been to hell and back over the past 18 months - first with Covid disrupting the ability to do business, and then with the meltdown in the valuation of tech stocks over the past 4 or 5 months.
But with some clean air in front of it, the stock price should recover to somewhere near its pre-Covid level, especially given the extent to which the business has grown over the past 3 years, namely:
275% increase in ARR ($9.4m today cf. $2.5m at Sept 2019)
190% increase in Operating Cash Flow ($9.4m in FY2022 cf. $3.3m in FY2019)
(compared to a 50% increase in Shares on Issue (216.1m today vs 143.2m at end of FY2019)
