Sangoma Technology still has Lots of cash from Equity Issue

On October 20 Sangoma Technology (STC) released it's Q4 and annual report and it did not fail to please it's shareholders.Annual revenues were up 20% to $131 million and EBITDA was up to $22 million which was a STC record.It also gave guidance for the next fiscal year.

    Annual Highlights

  Sangoma Technology had a good year.Probably the biggest highlight was an $80 million equity issue which is phenomenal for a company that had a market capitalization of less than $300 million at the time.This shows tremenduous investor confidence.And STC did not let it's shareholders down.Annual revenue was a record at $131 million;EBITDA exceeded guidance at $21.6 million or up 75%.Net income,at $4 million was double that of 2019.

       STC gives guidance for 2021 revenues of $143-$147 million.EBITDA,they say, will be between $24-$26 million.Sangoma will be consolidating  all the changes and mergers made in 2018 and 2019.                  

     What About the Cash?

  Sangoma says that it has a cash balance of $27 million.This is just a little more than their working capital needs.But they also report that they still have $76 million proceeds left from their $80 million equity issue.STC gives guidance for next year of $143-$147 million revenue and adjusted EBITDA of $24-$26 million.Both figures are about 10% ahead of this year.This is steady growth but investors are looking for sales growth similar to this year (16%).At the same time this blog sees that Sangoma needs time to consolidate properly it's recent acquisitions.So as to make their operation run smoothly.But it has enough cash to both invest in improvements in their present operation and put money into future growth.This blog suggests that it take a significant stake in Counterpath Solutions which only has a market capitalization of $27 million.It can run as a separate independent operation with more STC cash used for working capital.At the same time this covers Sangoma eventually moving into software to accompany their primarily hardware operation (with some software sales).       

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Vecima Networks beefs up Finances for Annual Report

     Vecima Networks(VCM)  is based in Victoria,B.C. and transforms cable television signals into compatible modems and internet compatible devices.This is called video streaming.VCM has been around for about 5 years but has only in 2020 become profitable.It reported a net loss and net loss per share in 2018 and 2019.But it picked up  in the second quarter a large new Saskatchewan cable company customer in 2020 called Access Communications as well as a Tier 1operator called APAC with 5 million subscribers.And now it is showing positive adjusted EBITDA as well as e.p.s. in 2020.In addition, it has a new contract with another customer in October called Midco.Midco has 440,000 customers in 400 communities, with an average size of 1000 people, in mid-western U.S.A.VCM is hoping  these 3 contracts will beef up earnings for the fourth quarter and annual report due on November12.

           Technological Improvements

    Of my 2 websites on Google Blogger this site,Workathon,covers the more technical companies.Vecima's base of customers is in rural areas where they cannot receive ordinary cable television service.VCM has video streaming equipment that transforms video signals and related signals in the cable television system into signals compatible with television and internet devices.This is a considerable improvement over the limited reception available before HDMI (video streaming) equipment.In my blog on Workathon dated July 30,2020 it was suggested that revenues could be increased if a small subscriber fee could be charged by VCM.     

          The Fourth Quarter

   VCM's next quarterly report will be on November12 and this blog sees improved financial performance.Adjusted EBITDA was $20 million for 9 months and $6 million for the third quarter.While e.p.s. was $.33 for 9 months and $.03 for Q3.VCM does not give annual guidance but this blog's estimate for the year is $27-$30 million for adjusted EBITDA and $.36-$.40 e.p.s.This makes for a P/E ratio of 32-35 times earnings which is only high if VCM cannot find new customers or new applications.My blog on Workaton dated July30 stated that" the stock price could be $13-$14 by yearend." It also stated that "revenues and earnings will not likely improve until 2021."Now it appears that revenues will increase in 2020 but will the margin on sales?So VCM is now slightly ahead of this blog's July estimate but can it meet the estimates of adjusted EBITDA and e.p.s given above?If so then advancing to the $14-$15 area by year end seems to be a quite good forecast.         https://www.moneysense.ca/ https://www.zacks.com/