Cloud Marketer Lyris Could Double And Still Be Undervalued
- The stock is down ~50% since April due to concerns regarding a slowdown in growth and transition away from lower margin legacy products to SaaS subscriptions.
- However, this is more than reflected in the 4x EBITDA multiple and 0.5x revenue multiple, a significant discount to its peers, many of which generate no EBITDA.
- Results should begin to improve over the next year due to continued strong demand for cloud-based digital marketing solutions, a recent enhancement to its core product and higher market share.
- In addition to the high demand created by the ongoing shift to a “Moneyball” approach to marketing, the 90%+ recurring revenue and 60%+ gross margin support a higher multiple.
- The recent swing to profitability even on a GAAP basis after years of losses should enable utilization of the $161 million of NOLs.