Namaste Technologies Inc. (TSXV:N) reported Q2 sales of $5.6 million, a 195% quarter-over-quarter increase, and anticipates accelerated growth in Q3 and Q4
SmallCapPower | May 2, 2018: Namaste Technologies Inc. (TSXV:N) is one of the world’s largest online retailers of cannabis delivery systems, selling vaporizers and smoking accessories through 24 e-commerce sites across 20 countries. Namaste is building a one-stop-shop marketplace for cannabis-related products in Canada.
Namaste Technologies generated trailing-twelve-month (TTM) revenues of nearly $14.0 million from vaporizer and other hardware sales. As Namaste starts selling cannabis-related products in Canada, along with increased sales from hardware, via expansion into emerging markets, revenues could grow multifold over the coming years.
Investment Thesis
- One of the leaders in online retailing of vaporizers and smoking accessories
- Building one-stop-shop marketplace for cannabis
- Decent revenues for a microcap with potential for much higher revenues in 2018
Online retailer of medical cannabis delivery systems globally
Namaste Technologies is one of the world’s largest online retailers for medical cannabis delivery systems, selling vaporizers and smoking accessories through 24 e-commerce sites across 20 countries. Namaste Technologies has market positions in Europe, Australia and the U.S. and has opened new supply channels in emerging markets including Brazil, Mexico and Chile. For fiscal 2017 ending August, the UK generated over 30% of its total revenues of $10.9 million, followed by Australia at ~25% and the U.S. at ~22%.
Namaste’s global footprint
Creating one-stop-shop marketplace for cannabis post CannMart acquisition and launch of NamasteMD
Namaste Technologies is building a unique one-stop-shop marketplace for cannabis by leveraging its e-commerce capabilities and existing database of Canadian medical cannabis consumers, complemented by the acquisition of cannabis distributor, CannMart Inc., in April 2017, and the launch of NamasteMD, in early 2018. The CannMart acquisition enables the purchase of cannabis accessories from wholesalers while reselling to online customers. As well, the NamasteMD platform enables onboarding of patients through online prescription/consultation. The marketplace is expected to also act as a key platform to sell its medical cannabis delivery systems, including vaporizers and other hardware. Note that Namaste already sells its vaporizers on Aurora Cannabis’ website under an Exclusive Hardware Supply Agreement, which was struck in late 2017.
Marketplace leverages Ecommerce, NamasteMD and CannMart
Currently patients undergo a tedious process for accessing medical cannabis, involving visiting a doctor for prescription and registering with a license producer. NamasteMD simplifies the process for acquiring a prescription through a virtual patient portal and offers the largest variety of domestic and internationally-sourced medical cannabis through CannMart. For sourcing, NamasteMD already made a supply arrangement with The Supreme Cannabis Company Inc. (TSXV:FIRE) for the purchase of 1,000 kilograms of medial cannabis in 2018. Note that CannMart has received a production license on March 16, 2018 and is currently awaiting the sales license.
Namaste Technologies has sufficient capital to fund the development of its marketplace. In February 2018, Namaste successfully raised $40.25 million in a bought-deal financing at $2.55/unit (included one two-year warrant with a strike of $3.15/share)
Potential for much higher revenues in 2018 and beyond
For the second quarter of 2018, Namaste reported sales of $5.6 million, a 195% quarter-over-quarter increase, and the Company anticipates accelerated growth in Q3 and Q4 of 2018.
Potential for continued revenue growth over the long term also shows promise, as the Company transforms into a vertically-integrated online cannabis seller in Canada, along with expanding into new emerging markets for hardware sales. Namaste’s estimates of revenues are robust over the next five years, reaching $223 million by 2022. Assuming a conservative $50 million in revenues for 2018, it puts Namaste Technologies among the top cannabis companies in Canada.
Five-year customer and revenue projections
Source: Company Presentation
Up listing to the TSXV increases visibility
Namaste Technologies announced recently that it has received final approval to list its common shares on the TSX Venture Exchange as a Tier 1 issuer. As TSXV is well known for listing several cannabis companies, the up listing provides Namaste with increased visibility and enhanced market access for Canadian and international investors.
Outlook and valuation
Currently one of the world’s largest online retailer for medical cannabis delivery systems, Namaste Technologies is building a one-stop-shop marketplace for cannabis-related products in Canada. Namaste generated decent TTM revenues of nearly $14.0 million from vaporizer and other hardware sales. As Namaste Technologies starts selling cannabis in Canada, once it completes its marketplace along with increased sales from hardware via expansion into emerging markets, revenues could grow multifold over the coming years.
Namaste Technologies – Peer Valuation
Source: Yahoo Finance, SmallCapPower
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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