On January 7, 2020, 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/Austin, TX; Denver, CO; Silicon Valley; Washington, DC; Minneapolis, MN; Ottawa/Toronto, ON; and Hyderabad, India.
Acquisitions Set the Stage for Revenue & EBITDA Growth in 2020
- At the start of 2020, QUIS acquired California-based Menlo Technologies for US$16.2 million in cash, stock, debt notes, and contingent payouts. In 2019, Menlo generated Revenue of US$17.5 million and EBITDA of US$1.8 million.
- In June 2019, QUIS acquired Ottawa-based Corporate Renaissance Group (CRG) for US$14.4 million in cash, stock, debt notes, warrants, and contingent payouts. CRG provides Microsoft technology and corporate business consulting software solutions. In 2018, CRG generated Revenue of approximately US$5.8 million and EBITDA of US$1.8 million.
- With the completed acquisitions, the combined company will have over 300 employees and a run rate Revenue of US$42 million and EBITDA of US$5.9 million.
Revenue Estimates Show CRG and Menlo Impact on QUIS Quarterly Revenues (Without Revenue Synergies)
Acquisition Strategy Fuels Inorganic Growth – More Deals to Come
- Targeting Microsoft solution partners, QUIS is executing a consolidation strategy to build the premier Microsoft partner in North America for business solutions and cloud innovation.
- In 2019, QUIS was the Microsoft U.S. Partner of the Year for demonstrating excellence in innovation and implementation of customer solutions based on Microsoft technology.
Catalysts for Growth
- Integrating Menlo’s technical and solutions competencies into the QUIS portfolio could drive enterprise growth in the North American market.
- The combination of CRG and Menlo’s Microsoft Dynamics businesses positions QUIS as a leader in the Microsoft Dynamics partner community.
Valuation:
- Ralph Garcea continues to believe that Quisitive is undervalued as, on a consensus basis, trades at a 2020E EV/Sales of 1.0x versus its North American IT Services comparables trading at 1.8x.
- Quisitive also trades at a 2020E EV/EBITDA of 6.7x versus its comparables at 13.1x.
You can access the report at the following link: FMG Research_QUIS_Jan-07-2020
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Quisitive Technology Solutions (TSXV:QUIS)
- www.quisitive.com
- Headquartered in Toronto, Canada, Quisitive Technology Solutions provides Microsoft solutions, primarily in North America, offering Microsoft cloud assessment & solution services, migration and implementation, as well as application maintenance, configurations, upgrading, performance analytics and intelligence.
- Quisitive offers cloud solutions for CRM, healthcare, manufacturing, oil and gas, payments, and supply chain industries.
- Quisitive is currently trading at $0.27 with a market cap of $29.7 million.
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