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Tesserent - Strong quarter as CyberBiz pipeline grows

Apr 2018


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Summary - Strong quarter as CyberBiz pipeline grows

Tesserent Limited (ASX:TNT) provides corporate cyber security services to a range of Australian and international clients. Highlights of the company’s quarterly results include the following.

  • Customer receipts  – $1.32 million during the March quarter ($4.4 million YTD).
  • Has increased CyberBiz channel partners to seven, including the Leading Edge Group (the latter is one of the largest independent IT resellers in Australia, with a client base of more than 25,000 small- to medium-sized businesses (SMBs) nationally, including with Leading Edge Computers Group).
  • Cash position – $1.63 million, with no debt.

Analyst comment: a solid quarter for Tesserent. With year-to-date cash receipts increasing to $4.4 million, the company remains on track to meet our forecast of $6 million for the financial year. In spite of this strong, ongoing sales performance, Tesserent continues to trade at less than 2X Price/Sales (a commonly used valuation technique for the sector), while their global peer group trades at around 4X Price/Sales.

Tesserent’s major focus during the past quarter remained implementation of Cyberbiz, which is targeting the two million SMBs in Australia. For this product, the key highlights of the quarter were the addition of seven new channel partners, who will, among other things, actively promote CyberBiz to their client bases, and first recorded sales revenue (+$100k).

Looking to the quarter ahead, we anticipate more of the same from Tesserent, with cash receipts of around $1.5 million, further focus on reducing operating costs and the addition of more channel partners for Cyberbiz, as it’s the channel partners that will drive long-term sales.

Valuation: we maintain our valuation at $0.25/share (currently $0.10).