My ASX stock of the day today is Total Brain Ltd (ASX: TBB). Total Brain shares are going ballistic today, up 10.14% at the time of writing to 38 cents a share. The company's share price closed at 34 cents a share yesterday, opened at 40 cents this morning, rose as high as 42 cents a share in early morning trading, before settling at the current level.
There's no doubt 2020 has been a wild ride for the company. Total Brain shares were as high as 83 cents in January and as high as 62 cents a share in May, meaning shareholders are still down significantly from those highs, despite the massive share price appreciation we've seen today so far.
So what is this futuristic-sounding company and why are its shares going wild today?
Who is Total Brain?
Total Brain describes itself as a "mental health and brain performance self-monitoring and self-care platform". It was founded in 2002 in San Francisco, California by neuroscientist Dr Evian Gordon. The company states that "our mission is to improve mental health and brain performance through brain-based self-awareness and training."
The pillar of Total Brain's business is a self-titled app (the Total Brain app). The app is available for smartphones and tablets as well as a desktop version. This app features a mental health screener, mental relaxation exercises and a 'brain capacity test', which measures your cognitive abilities across 12 'core brain capacities', which include memory, resilience, connectivity and anxiety control.
Users can use the app for free, but free usage is restricted to your 'brain score' as well as a few sample training apps.
However, users can also opt for Total Brain's paid membership, which is available on a subscription basis, costing $9.99 at the time of writing. A paid membership entitles the user to their full "scientifically validated brain health report" as well as a tailored training program and Total Brain's full suite of training apps.
The company also offers packages tailored to companies and organisations. The company or organisation can pay for its staff to access the platform and receive the assessments and benefits of the app previously discussed. Total Brain lists Boeing Co (NYSE: BA) and Stanford University as among its clients.
Why are Total Brain shares rocketing today?
Total Brain's share price was skyrocketing at market open this morning. However, the company only released a quarterly update at midday today. Putting that discrepancy aside, let's assume that today's strength is a result of this report.
Total Brain told investors that the company collected $800,000 in cash receipts for the quarter ending 30 September 2020. This was a 54% decrease, quarter on quarter. However, the company notes that in the previous quarter, a large upfront payment from a single contract was recorded. So if we adjust this number for that contract, revenue was actually up 20% on the prior quarter.
The company also notes that user registrations increased by 3% quarter on quarter, and 37% on a year-on-year basis. Brain profiles also increased by 4% and 37%, respectively.
Total Brain also told investors that user registrations have been growing at a 28% compounded annual growth rate (CAGR) between FY2017 and this quarter. Brain profiles had a CAGR of 35% over the same period.
In the company's annual report for FY2020 (released back in August), Total Brain reported annual revenue growth of 48.4%, with expenses only growing by 3% (highlighting the benefits of a software-as-a-service business model).
It's this continuation of Total Brain's impressive revenue growth, further confirmed in the quarterly report, that I estimate is pushing up Total Brain shares today.
