A couple of years back I was fortunate enough to trot along to the outskirts of Cambridge for a visit to GetBusy (GETB), which at the time was a relevant newcomer to the market.
The shares back then were trading around the 30p level and although looking somewhat subdued and operating under the radar, they nevertheless looked very attractive on a growth basis for the medium to longer term, hence my taking an interest.
Fast track to the current day and GETB, where the shares now stand at a more notable £1.06p has released its full year 2020 results, which shows ongoing progress, underpinned by one of the best performances around recurring revenue in the software (SaaS) sector.
Once more I have caught up with both the CEO Daniel Rabie and CFO Paul Haworth in order to run over the numbers and the prospects for the business going forward.
GETB’s software is very much in the right spot for a digital world providing customers with document management, communication and productivity services that improve their operations and efficiency.
The key parts of the business are SmartVault and Virtual Cabinet, both of which have an extensive customer base that incorporates small to medium and larger business customers.
End users are typically in the accountancy, book keeping and financial services markets that also includes insurance and insolvency customers.
In the results announced today, revenue saw an overall 12% year-on-year increase coming out at £14.2m against the previous £12.7m, representing a healthy performance in what has been a disruptive backdrop.
Importantly, recurring revenue provides for substantial visibility across the business with 92% of the total now falling into that category, stepping up from the previously reported 90%.
Net cash was also a positive at £2.3m which was someway ahead of broker Liberum’s forecast figure of £1.7m that had previously been earmarked.
Although there was a recorded EBITDA loss of £0.9m, this should be viewed in the context of the business being one that is continuing on a journey of scaling up. The Virtual Cabinet arm that is profitable and highly cash generative, largely supporting the growth of the emerging SmartVault arm, along with the third and more immature GetBusy offering.
With the onset of Covid, Rabie says that the company had been able to get their team up and running remotely, smoothly and efficiently in order to serve its many customers and the business was able to operate positively.
In terms of the pandemic’s effect on business itself, the CEO adds that there had been a positive result, as whereas the company’s software services are largely embraced for productive benefits, there had also been a notable embracing to the mission critical elements and functionality thus adding value.
Speaking of the growth across the company CFO Haworth commented, “a lot of that is coming from SmartVault which grew recurring revenue about 30% over the period, whilst Virtual Cabinet saw growth of 6%”.
He also says that right now as a share of the recurring revenue SmartVault is providing for around 40% of the total with the remainder made up from Virtual Cabinet and he expects that to most likely reach parity in the next two years.
Expanding on the growth comparisons between these two arms the CFO adds, “SmartVault is a much more scalable architecture and is also a pure cloud offering that doesn’t require onsite implementation which Virtual Cabinet sometimes does.
“As more businesses move to cloud products, so SmartVault’s appeal will grow and it is already very strong in the US where there is a lot more growth in the market. Over time, it will become the more dominant aspect of the business”.
The third part of the companies offering is that of GetBusy which is has been developed to provide longer term growth traction, but at present is very much in its infancy.
That said, CEO Rabie remains optimistic on its prospects and said that a recent alignment with Netsuite provides a clear route to market for GetBusy, which has only recently commenced generating revenues. “There is a scaleable opportunity in an addressable market for this and we believe it is well worth the long term investment”.
There are now 182 paying customers for GetBusy, where the average revenue per customer is around $400 with recurring revenue also playing a part here moving forward.
Haworth cites the GetBusy product as being on a journey and at present it is largely impossible to predict on potential revenues, but that it could well follow the route of SmartVault further down the line.
He points out that they have a variety of metrics in place which they collect and use to inform them of the scale and payback timing in relation to acquiring new customers.
Additionally, the CFO adds that whilst they continue to commit to spend on further development in this area it will be no more than that seen in full year 2020.
As the company is very much operationally geared, any sign of momentum really building with GetBusy alongside continued scaling up from the more established SmartVault, then profits could soon begin to feed through for the company and make for marked progress.
Although the shares have enjoyed a strong run over the last year and may for now look fairly priced, it is also arguable that having faired well in the disruptive pandemic period, that as we emerge with a further embracing of digital solutions the recent progress could well accelerate.
As with other SaaS businesses recurring revenue is a constant that warms investors appetite and to this end GETB is seemingly getting right with impressive numbers. Haworth says that he sees the level as probably peaking at 95% as there will always be a small element of non recuring revenue such as some consultancy undertaken by Virtual Cabinet.
“We are more or less a pure subscription business now and going forward we will probably see recurring revenue stabilizing around the low nineties over the next few years”.
That sounds positive enough and with prospects for ongoing organic growth across the whole operation looking solid, then GETB continues to look well placed for further gains.
Another positive that investors receive comfort from is that the company has no customer concentration whatsoever whilst there is no single customer that accounts for anything of size.
Both the CEO and CFO say they are very encouraged by the full year results and are pleased with the acceleration of positive trends around digitalisation and remote working.
The churn rate remains very low across the whole business and given the ongoing strong cash generation from Virtual Cabinet, then investment can continue to be made in order to further drive organic growth.
Potential acquisitions are certainly not ruled out, but Rabie says that any addition would fit into their existing suite and be able to serve customers already on board, along with bringing new one’s into the fold.
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