Sangoma Technology's Annual Report shows it's Flush with Cash

         On August 13 Sangoma Technology (STC) released an update on it's annual results for 2020.These are unaudited results for the yearend of June 30.And on August 14, STC stock moved up 12% to $2.73 per share.Investors saw a number of things in this report that they liked.First sales are expected to be $133 million for a 22% increase over 2019.And 2019 sales were up almost 50% from 2018.Secondly Sangoma tells shareholders that EBITDA will be at the upper end of their annual guidance,that is,$21 million.Guidance was for $19-$21 million EBITDA.No information was given on forecasted net income or e.p.s.But investors can see that even with the slowdown caused by the pandemic Sangoma showed excellent results.The press release pointed out that there was a softening of it's product sales but there were strong service sales.

         Annual Highlights

   Clearly the biggest surprise was the growth in revenues when the economy was in a very slow phase.In fact, the growth since 2018 is almost 250%.That is because Sangoma made 2 important acquisitions in late 2018 and 2019.And it usually takes more time for new divisions to mesh with older divisions and older products.But another large surprise was that STC raised $80 million in 2020.This represents 33% of it's market capitalization in one year.And is an excellent accomplishment for a small cap.STC says that $9 million of the new funds will be used to pay off  their credit facilities.

                                             

 

     The Year Ahead  

     Now STC is sitting in a good position with $70 million in cash and little debt.Some of this cash will be invested in it's present operation to foster organic growth.But there will be lots left over to make acquisitions.Sangoma may already have it's eye on a likely candidate now.But there are a number of listed small caps in it's space with reasonable Price to Earnings ratios.And there is a plethora of junior  techs that are unlisted that are very inexpensive to buy.The benefit of juniors that are unlisted is that they often have new technologies to bring with them.But new revenues are hard to get with a junior technology company.So perhaps the best suggestion for new acquisitions is to take one of each - a junior listed telecom company and a junior unlisted telecom based company.

                 https://www.fool.com/