John Leonard, CFA
Special situations, micro-cap, contrarian, CFA

Globalscape Is An Overlooked And Undervalued Play On Mobile Growth

Investment thesis

Globalscape (NYSEMKT:GSB) trades at a mid single-digit multiple despite strong growth prospects, a high free cash flow yield and a "valuation multiple" enhancing business model transition. The net cash position and rising cash flow limit downside risk while the significant discount to private startup valuations provides upside potential.

Company overview

GSB and its wholly-owned subsidiary TappIn provide secure information exchange solutions for enterprises and consumers. GSB serves clients primarily in the U.S., U.K., Canada and Australia in the finance, healthcare, energy, retail, manufacturing and engineering markets.

Revenue is generated from software licenses, maintenance and support (M&S), professional services and SaaS subscriptions.

Strong growth + margin expansion + high free cash flow

The seemingly modest revenue growth...

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