Ideas: RDM Corporation (TSX: RC), QIS Information Technologies Inc. (TSXV:
QIS), AirIQ Inc. (TSXV: IQ) and Avante Logixx Inc. (TSXV: XX) rank high in
recurring revenues, making them more predictable and with appealing takeover
revenue is the portion of a company's sales that is highly likely to continue
in the future. Revenue that is predictable, stable and can be counted on with a
high degree of certainty is a very desirable quality for small cap investments.
Because small companies are very vulnerable to unforeseeable events, a
recurring revenue base offers small cap investors the visibility into the
future and helps minimizes risk.
evaluating such companies, the quality of the recurring revenue base is an
important consideration. High gross margin recurring revenues generated from
multiple customers that have low customer churn rates are highly valued.
this information in mind we list four Investorfile stocks that rank very high
in the value of their recurring revenue business model:
RDM Corporation (TSX: RC) - RDM has built a growth business based on recurring
revenues from payment processing services through its cloud-based Image &
Transaction Management System service platform for major financial
institutions in the USA. Recurring payment processing services revenue
represents approximately 75% of the Company’s total revenues.
Quorum Information Technologies Inc. (TSXV: QIS) - Quorum is growing critical
mass of installed auto dealerships that supply a recurring revenue stream by
paying recurring monthly support and service fees for the Company’s Dealer
Management Software offering. Recurring revenue represents approximately 75% of
total revenues for the Company.
AirIQ Inc. (TSXV: IQ) –AirIQ’s offers a suite of asset management
services, end-to-end wireless solutions which allows operators of fleets of
delivery trucks, service vehicles and rental or company cars the ability to
monitor, manage and protect their mobile assets.Approximately 65% of the
Company’s total revenue is recurring from the monthly wireless airtime
fees earned from the connection of AirIQ’s GPS hardware devices that are sold
and installed on the mobile assets of its customers.
Avante Logixx Inc. (TSXV: XX) - Avante Logixx provides best-in-class and
high-end residential and commercial security services, including system design
and installation, rapid alarm response, alarm monitoring, video analytics,
locksmith services and hardware and secure transport through the use of
advanced technology. Avante’s monthly monitoring services are provided through
multiple channels using different technologies and equipment accounts for about
40% of the Company’s revenues, which are recurring.
predictability of recurring revenues minimizes the risk and makes for more of
an attractive investment. This also often translates into premium takeover offers
for publicly listed companies with recurring business models. Depending on
industry and company size, recurring revenues can obtain valuation multiplies three
or four or five times plus higher than non-recurring revenues.
a valuation exercise we suggest a potential takeover stock price on our four
Investorfile stocks profiled. Our takeover valuations are based our 12-month
forward view of each company’s revenues. We valued each company’s annual
recurring revenue base at four times, and non-recurring at one time and added
any net cash per share to derive a takeover stock value on a fully diluted
Takeover Stock Valuations: (Last close in brackets 7/15/2016)
- RDM Corporation -C$6.25 (C$4.48)
- QIS Information Technologies Inc -C$1.00 (C$0.55)
- AirIQ Inc. -C$0.35 (C$0.115)
- Avante Logixx Inc. -C$0.55 (C$0.245)
note that there are other Investorfile Top Ideas that are growing their
recurring revenue base of business. These companies include Intrinsyc
Technologies Corp. (TSX: ITC), Sangoma Technologies Corp. (TSXV: STC) and Intouch
Insight Inc. (TSXV: INX).
TSX: RC – Yes
TSX: ITC – Yes
TSXV: XX – Yes
TSXV: QIS – Yes
TSXV: STC – Yes
TSXV: IQ – Yes
TSXV: INX - Yes
This article is for informational purposes only. This article is based on the
author's independent analysis and judgment and does not guarantee the
information's accuracy or completeness. The information contained in this
article is subject to change without notice, and the author assumes no
responsibility to update the information contained in this article. The
information contained within this article should not be construed as offering
of investment advice. Those seeking direct investment advice, should consult a
qualified, registered, investment professional. This is not a direct or implied
solicitation to buy or sell securities. Readers are advised to conduct their
own due diligence prior to considering buying or selling any stock.
Investorfile is not engaged in an
investor relations agreement with RDM Corporation, Avante Logixx Inc., Sangoma
Technologies Corp., Quorum Information Technologies Inc. Intrinsyc Technologies
Corp., Intouch Insight Ltd., and AirIQ Inc. nor has it received any
compensation from RDM Corporation, Avante Logixx Inc., Sangoma Technologies Corp.,
Quorum Information Technologies Inc. Intrinsyc Technologies Corp., Intouch
Insight Ltd., and AirIQ Inc. for the preparation or distribution of this
The author of this article has acquired and may trade shares of RDM
Corporation, Avante Logixx Inc., Sangoma Technologies Corp., Quorum Information
Technologies Inc. Intrinsyc Technologies Corp., Intouch Insight Ltd., and AirIQ
Inc. and Gatekeeper Systems Inc. through open market transactions and for
investment purposes only.