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Why the Bigtincan share price is down 13% today

The Bigtincan Holdings Ltd (ASX: BTH) share price is down 13% to 46 cents in Monday afternoon trade after the sales enablement automation platform business announced that it has successfully completed its institutional entitlement offer.

Bigtincan has raised proceeds of around $12.4 million before costs from institutional investors at 42 cents per share. Eligible retail shareholders will also be invited to participate in a retail entitlement offer at the same price to raise a further $3.2 million before costs.

The offer price represents a 21.5% discount to the last close of trade price before Bigtincan went into a trading halt (April 10th) and a 19.0% discount to the theoretical ex-rights price.

Proceeds from the $15.6 million capital raising are intended to be used as follows:

  • $5.5 million to expand sales and marketing personnel mainly in the United States and the United Kingdom.
  • $3.0 million for continued innovation in technology and product development.
  • $5.5 million for merger and acquisition opportunities that satisfy the company’s acquisition criteria.
  • $1.6 million in working capital and transaction costs.

Foolish takeaway 

The Bigtincan share price is still up an impressive 78% in 2019 in spite of today’s fall. It has been one of the best performing small cap companies on the Australian market this year alongside other promising technology stocks Audinate (ASX: AD8)LiveTiles Ltd (ASX: LVT) and Volpara Health Technologies Ltd (ASX: VHT).

In February, Bigtincan reported its half-year result for the 2019 financial year. The company announced that annualised recurring revenue grew 63% to $20.9 million with revenue up 56% to $9.4 million. Of particular note was the 2% rise in retention to 87% and the 4% increase in gross margin to 88% demonstrating the ongoing cloud scale benefits. However, the company is still not profitable after posting a net loss of $1.95 million for the period.

Bigtincan recently upgraded its guidance for year-on-year revenue growth to be in excess of 40% for FY19 as the company continues to win new customers and up-sell to existing customers. The business certainly has a lot of potential and remains a stock that small-cap growth investors should be monitoring at the very least.

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Motley Fool contributor Tim Katavic has no financial interest in any company mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of BIGTINCAN FPO and VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO. The Motley Fool Australia has recommended BIGTINCAN FPO and VOLPARA FPO NZ. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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