- Due diligence and execution of contracts for Asta acquisition complete.
- Tesserent/Asta consolidated pro-forma revenue and other income = $18 million for FY18.
- Active customer base increased from circa 200 to 350+.
- Shareholder approval to conclude transaction sought in December 2018.
Analyst comments: this announcement confirms not only that the Asta acquisition remains on track for completion before year's end but also that the group's combined revenue during the 2018 financial year amounted to $18 million. This figure, which exceeds our previous estimate by around $2 million, is also $6 million more than the company's current market capitalisation (post transaction - $12 million).
In other words, Tesserent is currently trading at a revenue multiple of less than 0.7x, which is extremely low given that it operates in a rapidly growing sector.
We highlighted this in our review of other ASX-listed small cap tech stocks that generate revenue - all trade at a significantly higher multiple than Tesserent.
Increasing sales more ways than one
Although Tesserent has been focused on finalising the Asta transaction, it appears the two companies may already be working together, given the significant rise in sales this year (239% increase YoY September 2018 quarter).
This may be due not just to the expanded product offering (diversified IT solutions as well as Internet Security-as-a-Service, although the latter remains the core competency) and a move into more innovative sectors (viz recent agreements with major artificial intelligence and blockchain groups) but also to an expansion into overseas markets.
We expect this trend to continue once the Asta transaction is finalised; indeed, the March quarter will be telling in that it represents the first chance to assess the group's performance in terms of combined revenue and profit.
Valuation: we value Tesserent at $0.27 / share (share price $0.07 / share). For more details of our analysis, watch the video.
To view the video, please visit:
About Tesserent Ltd
Tesserent Ltd (ASX:TNT) is a specialist in managed cybersecurity and networking. Tesserent provides enterprise-grade managed cybersecurity and networking services to corporate customers in Australia and internationally in the UK and Korea. Tesserent provides a 24/7 Security-as-a-Service offer to small and large organisations', giving customers peace of mind that their networks and critical data are protected. Tesserent also provides innovative cybersecurity solutions to small-medium businesses via the CyberBiz suite of services. In July 2018 Tesserent announced the intention to acquire Asta. Together, the companies will offer a powerful suite of end-to-end managed IT security solutions. http://www.tesserent.com
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