Quisitive Technology Solutions, Inc. (TSXV:QUIS) has seen a 42% rally year to date, and a 255% return over the past 90 days
SmallCapPower | February 5, 2020: Quisitive Technology Solutions, Inc. (TSXV:QUIS) is a technology consulting firm that provides organizations with Microsoft Cloud and proprietary software as a service (SaaS) solutions for cloud data services.
Company Overview
Quisitive Technology Solutions helps its clients harness the power of the Microsoft Cloud and technologies, such as artificial intelligence, machine learning, IOT, and blockchain through customized solutions. Quisitive’s vision is to become the premier Microsoft Solutions provider, and is planning to scale organically and through acquisitions.
Quisitive Technology Solutions is one of 35 companies to have earned the “National Solution Provider” designation from Microsoft. Typically, most NSPs are regionally based and have limited ability to scale their services to Microsoft’s total addressable market. Quisitive plans to create its own tier within the NSP designation as the premier Microsoft Solution Provider in North America, providing scale through acquisitions to address the growing demand for Microsoft Azure-based services.
Quisitive’s vision is to become the premier Microsoft Cloud Services provider. In 2019, Quisitive Technology Solutions was awarded the 2019 U.S. Microsoft Partner of the Year for being 100% committed to the Microsoft Azure consulting company. Quisitive generated $300M in revenue for Microsoft Azure with 125 assessments in 2019. The Company’s goal is to become large enough to handle multi-million-dollar Microsoft Azure projects, and small enough to maintain the agility needed to develop unique and innovative solutions utilizing all the tools in the Microsoft Azure stack – including Blockchain, AI, and IoT.
Quisitive Technology Solutions announces acquisition of Menlo Technologies, a provider of Microsoft technology, corporate consulting, and business software and systems. Menlo offers managed onshore and offshore development services from its Silicon Valley headquarters and offshore development center in Hyderabad, India. Over the last 12 months as at Sep 30, 2019, Menlo generated $17.5M in revenue and $2.4M in Adj. EBITDA. The acquisition closed in January 2020.
High-growth sticky revenue business. Approximately 20% of Quisitive’s revenues are recurring and analysts are forecasting ~100% year-over-year revenue growth. Gartner Consulting estimates that cloud services will grow exponentially through to 2022. The global cloud-services market grew to $214.3B in revenues in 2019, a 17.5% increase from 2018. Gartner estimates that the fastest-growing market segment will be cloud system infrastructure services, or infrastructure as a service (IaaS), which is forecast to grow 27.5% in 2019 to reach $38.9B, up from $30.5B in 2018.
Valuation
Trades at a discount compared with peers. Quisitive Technology Solutions stock trades at NTM EV/EBITDA and NTM EV/Sales multiples of 9.1x and 1.2x. This is a discount compared with Canadian technology companies, which trade at median NTM multiples of 18.9x and 5.9x, respectively. However, these multiples are in-line with those of larger-cap Technology/IT Services Consulting companies. We think a valuation in between these two peer groups is justified based on Quisitive’s higher gross margins and revenue growth compared with other consulting firms. We think this valuation gap could close as the Company continues to post solid quarterly financial results, executes on its plan to become North America’s premier Microsoft Cloud Services provider, as well as further grow its cloud services business in North America.
Shares of Quisitive Technology Solutions have soared about ~250% during the past 90 days, to its current price of $0.36, and now trade at a market capitalization of about C$37.9 million.
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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