The market is asleep on this one IMO, at a market cap of 2.9 mil it is a steal.
If the sale of realtor8 goes through, which looks likely, cash backing will be around 5 mill.
8common is looking to focus on its Expense8 software business and possibly acquire other software businesses that focus on the employee productivity space.
Expense8 is operating in the SaaS travel and expense market. This market from what I could gather is expected to grow on a year on year basis for the foreseeable future ,with a lot of the growth expected to come from the Asia pacific region.
Expense8 is currently being valued by the market at less then zero, Assuming the realtors8 sale proceeds.
Expense8 already has a wide range of blue chip clients including:
Woolworths, Federal treasury, Roche Australia, Boral Timber, Amcour, Department of Prime minister and Cabinet, Federal department of Finance, Australian electoral commission, Mitre 10, NSW department of Industry and many more.
Revenues from Expense8 are increasing on a yearly basis, and client retention is very high.
As mentioned in the annual report the initial cost to acquire customers is born by expense8 upfront, as usage increases, profit margins increase also, resulting in strong financial performance in the outer years of contracts.
Operating cash flow from operations was (57 000) last quarter down from (99000) the previous quarter.
They seem to be on track to go cash flow positive in the near future for reasons mentioned above.
I think the recent demise in SP is probably more reflective of the lack of liquidity then the overall company performance in recent times. As the SP has almost halved in the last 2 months on basically no volume.
8common is currently valued for failure, but there is building evidence to the contrary, they are well funded at the moment with around $800 000 in the bank and soon to have by all accounts another $4.3 mill, with a current quarterly burn rate of $57 000 there is very little risk at the present of funding issues.
They are well positioned to take advantage of the growing SaaS travel and expense market, and with sale of Realtors8 will have a nice little war chest to expand Expense8 and possibly acquire another software business to add value to the company moving forward.
8CO Price at posting:
5.1¢ Sentiment: Buy Disclosure: Held
