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Velpic signs up 50th enterprise client

Published 20-DEC-2016 14:18 P.M.


3 minute read

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Christmas has come a couple of days early for Velpic (ASX: VPC) with management announcing on Tuesday morning that it has recently signed its 50th client to the company’s e-learning platform, confirming strong client growth which is expected to be the precursor to future increases in revenue.

On this note management highlighted the fact that the company has achieved an average of 22% quarter on quarter recurring revenue growth from SaaS clients since December 2015.

In response the group has expanded its sales team and product offering, which in turn is expected to assist in generating further growth in 2017.

There are other initiatives in the pipeline with platform innovation and new projects and collaborations expected to go live in the next 12 months.

VPC has made outstanding progress in just over 12 months since it listed through the International Coal shell in October 2015.

Having brought new products to market and built a strong presence across the east and west coast markets of Australia, the company is now focused on replicating the success on the international scene, beginning with New Zealand, the UK and the US with further strategic partnerships to be established in 2017.

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Baillieu Holst sees Velpic as an impressive medium-term story

Baillieu Holst analyst Luke Macnab has been impressed with VPC’s ability to bring on board important new clients, as well as entering into mutually beneficial collaboration agreements.

He sees the release of the small to medium enterprise (SME) version of Velpic as instrumental in spearheading the group’s offshore strategy, particularly in the US and the UK.

In summing up the group’s prospects, Macnab said, “Velpic already has a number of large companies as customers and the management team has proven expertise in growing SaaS businesses and as such remains a Speculative Buy with the potential for significant upside in the medium term”.

On this note, he is forecasting VPC to generate earnings before interest and tax (EBIT) of $1.2 million from revenues of $10.2 million in fiscal 2019, translating to earnings per share of 0.2 cents. This implies a PE multiple of 8.5 relative to Tuesday’s opening price of 1.7 cents.

Potential investors should not make assumptions regarding past or future share price fluctuations, nor should they use forward-looking statements provided by the company or brokers as the basis for an investment decision. IBG is a speculative stock and independent financial advice should be sought prior to investing in this company.

Velpic poised to tap into strong global industry growth

While VPC has experienced significant growth in its own right, management noted that global growth of the learning management services market has shown no signs of slowing down and this year it was predicted to be worth US$5.22 billion.

With an estimated compound annual growth rate of nearly 25% this translates to a US$15.7 billion industry by 2021.

Chief Executive, Russell Francis, also noted that VPC had been ranked globally in the top 20 LMS enterprises on a number of criteria with its flexible and scalable solution providing a significant competitive edge. This is a factor that he believes will continue to attract new customers, both domestically and internationally.

New products in 2017 aligning with interactive learning methods

VPC is also planning to launch new products in 2017 and Francis commented that the emergence of technology trends such as Virtual Reality, Artificial Intelligence and Machine Learning, along with the overall Gamification of digital learning were exciting developments.

Relating these developments to the group’s product development initiatives, Francis said, “Interactive learning methods are becoming increasingly popular and are more effective than traditional learning techniques, and it is this shift that continues to drive our product strategy in 2017”.

He also highlighted the fact that VPC maintains a global first mover advantage by incorporating video content creation into a single, simple, engaging platform with other LMS features, and this competitive advantage will be further advanced in 2017.

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