Here’s why the Bigtincan share price has soared 50% higher in the past 6 months

The tech company is powering where others are lumbering.

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Sales enablement software developer Bigtincan Holdings Ltd (ASX: BTH) has been one of the standout performers in the ASX tech space over the past 6 months.

In that time, Bigtincan shares have soared over 50% higher (to $1.33, as at the time of writing). The gains have come on the back of the company’s strong recent financial performance, as well as the announcement of a key strategic acquisition.

Company background

Bigtincan’s software platform is designed to support its corporate clients through their entire sales and marketing lifecycle. It helps to deliver and automate many of the processes involved in onboarding and training new staff, engaging with customers, and analysing sales figures (among other things).

Bigtincan operates a software-as-a-service (SaaS) business model, which means it sells subscription-based licenses to its customers. The licenses allow customers to access Bigtincan’s software platform remotely using cloud technology – but must be renewed periodically.

This is why SaaS companies will often talk a lot about “annual recurring revenues” (or ARR for short). These are the revenues expected to be received annually based on the current number of active subscriptions.

The financials

Bigtincan released its FY21 financial results to the market on 26 August. Revenues for the year ended 30 June 2021 were up 42% (to $43.9 million). However, increased operating expenses meant that the company’s net loss increased year on year, from $12.2 million in FY20 to $13.9 million in FY21.

The company explained the increase in operating expenses was due to investments in “growing the business”. This included projects such as increasing the company’s data science capabilities and strengthening its infrastructure to support higher customer numbers.

Brainshark acquisition

But the really big news came a few days prior to the release of the company’s results. That’s when Bigtincan announced that it was acquiring US-based sales coaching software developer Brainshark, Inc. for US$86 million.

Acquisitions are not a new part of Bigtincan’s growth strategy. Earlier this year, it acquired voice analytics company VoiceVibes, Inc., also based in the US.

But the Brainshark acquisition is still a level up for Bigtincan. Brainshark has been around since 1999 and already employs 180 staff. It has more than 900 corporate customers, including international brands like JPMorgan Chase & Co. (NYSE: JPM), PepsiCo, Inc. (NASDAQ: PEP) and Zoom Video Communications Inc (NASDAQ: ZM).

Bigtincan estimated that annual recurring revenues for the combined entities would reach at least $119 million by the end of FY22. By comparison, Bigtincan’s ARR at the end of FY21 was just $53.1 million. No wonder the Bigtincan share price jumped almost 25% higher when the acquisition was announced to the market.

Recent moves in the Bigtincan share price

The Bigtincan share price has trended lower in September. After climbing as high as $1.48 by late August (its highest price since last October), the Bigtincan share price has now slid back around 10%.

The company has also completed a capital raise during this time, with the funds being put towards financing the Brainshark acquisition.

Bigtincan shareholders will now be looking ahead — and hoping the Brainshark acquisition can deliver on its potential.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Rhys Brock owns shares of BIGTINCAN FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended BIGTINCAN FPO and Zoom Video Communications. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. The Motley Fool Australia has recommended Zoom Video Communications. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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