A SaaS stock trading at <2x ARR valued at Single-Digit Free cash flow ($)
While ARR and earnings are growing 20%+...
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Disclosure: The author currently owns shares in the company as of 15 November 2024. The security could be sold at any point in time without prior notice.
“Hello my name is MIJ and I’m a SaaS-aholic”
I promise…it’s not that I want to keep writing about cheap microcap SaaS companies but many seem to be left for dead. I want to avoid accidentally making this substack a factor bet (i.e. overweight on Japanese software) and was initially going to skip writing about this one but this might be the cheapest yet. It has all the ingredients I like, so bear with me.
This is:
Founder led; with a strong mission and skin in the game
a “Broken” IPO going unnoticed
True growth concealed by decline in non-core revenues + a SaaS transition story that’s growing >20%
Margins are inflecting and primed for operating leverage
A market-leading product with a track record of winning large, notable logos (i.e. High-quality customers) leading to major differentiation
Trading at: <1.7x ARR and single-digit FCF multiple, significantly below peers
Expected 3-year return 141% (IRR: 34%)