On June 7, 2019, Ralph Garcea of Focus Merchant Group (FMG), formerly the Tech Analyst at Echelon Wealth Partners, issued a research report on Quisitive Technology Solutions (“Quisitive“, TSX:QUIS).
Quisitive is a premier Microsoft solutions provider, serving clients globally with offices in Dallas, TX, Denver, CO and Toronto, Ontario.
Q1/19 Financial Update
In Q1/19, Quisitive reported revenue of $4.0 million, with adjusted EBITDA of $223K (5.6% margins). With a focus on the Microsoft cloud pipeline momentum, the Company closed five net new cloud migration projects in Q1/19.
In Q1/19, Gross Margin was 40.0%, with internal utilization rates in excess of 80%.
During Q1/19, Quisitive managed 65 customer engagements, including 52 Microsoft Azure Cloud Assessments and 13 new customer projects in Microsoft Azure, Office 365, and blockchain custom development.
CRG Acquisition
Quisitive also announced the acquisition of Corporate Renaissance Group (“CRG“), a leading provider of Microsoft technology, corporate consulting, and business software and systems based in Ottawa, Ontario. For 2018, CRG generated revenue of ~C$7.8 million with 30% recurring revenue and an adjusted EBITDA of ~C$3 million with 38.5% margins.
Microsoft Award
Quisitive announced it won the 2019 Microsoft Country Partner of the Year Award for the U.S. and was honored among a global field of top Microsoft partners for demonstrating excellence in innovation and implementation of customer solutions based on Microsoft technology.
In the research report, the Ralph Garcea expects Quisitive to announce further acquisitions in the near-term and sees considerable leverage in the business model as the Company can now sell Azure Assessments into the recently-acquired CRG customer base.
Valuation:
He believes Quisitive is undervalued as, on a consensus basis, trades at a 2020E EV/Sales of 0.6x versus its North American IT Services comparables trading at 1.4x.
You can access the report at the following link: FMG-Research_QUIS_Jun-07-2019
