Where do we start? Valuing EVS post EMS acquisition is challenging on the available information. The EVS strategy of old to "complement organic growth with complementary acquisitions" is laughable at this point.
The company moves from one that had 80 staff, 100 customers, targeting FY20 $12m arr to something in the order of 280 staff, 500 customers, c. $55m revenue (note: not arr). Safe to say that EVS is no longer the company we knew last month.
EVS had 30 June 2019 ARR of $5.6m. Come 31 Dec 2019 they are reporting $5.9m arr. Have they really spent the last 6 months solely focused on this acquisition? Looks like the sales and marketing team has been MIA. The EVS sales pipeline (page 25 in ann) feels completely out of place in light of this acquisition given that a new strategy will need to be presented to investors to align the two companies. The EMS pipeline (3x current EMS revenues) at first glance is hard to visualise considering revenue growth of just 5% between 2017 and 2018 and less than 10% in 2019.
On paper a post acquisition MC of $195m with $55m in revenue and a goal for $100m across the next 3 years is attractive. But it's just far too early to tell how these two companies will integrate. Plenty of research here to do while we wait for more information from the company post 28 February.
Interested to hear holders thoughts as I've been out for awhile now.
EVS Price at posting:
22.0¢ Sentiment: None Disclosure: Not Held
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