TOP IDEAS: Recurring revenues are building as big banks and big companies subscribe to Boardwalktech Software’s (TSXV: BWLK) Digital Ledger technology for mission-critical applications.

Admittedly, this small cap value investing blog took a bit of a flyer when we first recommended Boardwalktech Software and appointed the Company’s stock to Investorfile’s list of Top Ideas just over two years ago (See: Boardwalktech Software offers a growth investment opportunity in digital data management at a value stock price). At that time, the Company was in a net debt financial position but with good business prospects. Today, Boardwalktech is debt-free and the business prospects are converting into recurring revenue streams as its Digital Ledger technology Software-as a-Service (SaaS) subscription sales gain momentum.

Based in Cupertino, California, Boardwalktech Software Corp. (TSXV: BWLK – C$0.83) has developed a unique and patented Digital Ledger database technology, which the Company says is designed specifically for collaborative, multi-party enterprise applications. The Company says this Digital Ledger technology creates a single version of truth for all enterprise information by unifying unstructured and structured data for faster and more insightful decisions. The Company’s customers include Fortune 500 Companies in CPG; High Tech; Financial Services; Manufacturing and Retail, among many other sectors. Boardwalktech’s revenue is generated from two primary sources: software subscription to its core Boardwalk Unity Digital Ledger Platform and professional services.

Big companies today are subscribing to Boardwalk Unity Digital Ledger Platform to resolve key enterprise business problems by connecting multiple users in the enterprise value chain. This is to improve planning and results with the alignment of data from various/multiple enterprise systems of records used in the information exchange processes. As such, multiple users can secure simultaneous access to the same data in a relational database environment, which supports concurrent access to record objects while being edited. The Boardwalk Unity Digital Ledger Platform is a complete enterprise platform that resolves trust and collaboration issues that large companies face when working with multiple parties. This enables customers to automate manual business processes and then turn "digital” to run mission-critical applications managing the digital exchange of information internally and with customers, channels and suppliers. It also allows for chaining of transactions in a database to support decentralization, provenance and immutable versioning, security and transparency and change management/change history for verification of data without having to be dependent upon third-parties.

After slower than expected uptake, new subscriptions for Boardwalk Unity Digital Ledger Platform are now building nicely. This past spring, the Company announced it had signed a long-term contract with one of the world's largest banking and financial services companies based in New York. This major Bank customer plans to deploy the software technology across its global enterprise with a focus on compliance, risk, data management and business process improvement. Boardwalktech says the net proceeds from this contract are expected to exceed US$4-million over the first three years and should increase in subsequent years as this platform is adopted and deployed globally across the client's banking and financial services business units. Last month Boardwalktech reported it has expanded its software license and services contract with one of the top accounting and consulting firms in the world, which adds to the Company’s annual recurring revenue by an additional US$500,000 with this existing customer.

In Boardwalktech’s Fiscal 2022 earnings report, Management said that due to the increase of new recurring revenue contracts, for the first time, the Company will be providing guidance on a go forward basis as the predictability of business has improved. As such, the Company projects revenue for the upcoming fiscal year in 2023 to be US$6.5-million to US$7.0-million, which implies a more than 50% increase from the total revenues generated the prior fiscal year. Almost all of the growth will come in the form of Annual Recurring Revenues (AAR). This revenue guidance is based on existing contracts within the Company’s control to date and excludes potential contracts in the pipeline and add-on professional services, which could lead to more sales and maybe revised revenue guidance upward for the current fiscal year. It is also important to note that Management believes the Company has sufficient funds to achieve its guidance or upside growth, while reaching profitability in Fiscal 2023.

Last week Boardwalktech released Fiscal 2023 Q1 results which reflect some of recent business momentum. The Company reported revenues for Q1 was US$1.51 million, up 48% from the prior year and a 26% sequential increase from what was reported in last quarter. Also cash inflow from operations was US$0.9 million. The Company had a cash balance of US $1.7 million and no debt as of June 30, 2022.

Since Investorfile first recommended Boardwalktech Software, the stock has generated a high-point return of 164%, based on its highest closing stock price of C$1.37. Subsequently, the share price has retreated like most small cap tech stocks in the bear market of 2022 and last traded at C$0.83. The current share price still represents 60% upside from the day we initiated coverage ofthis stock in our blog.

Given recent developments, we feel strongly that the Boardwalktech Software story is starting to prove itself. The Investorfile blog still thinks that the Boardwalktech’s Digital Ledger technology is one of the most compelling software stories in the small cap market today. The Company’s recent financial results are beginning to reflect this.

Boardwalktech Software Corp. has approximately 44.3 million shares outstanding.

Company’s website: www.boardwalktech.com

Author Ownership Disclosure: TSXV: BLWK – Yes

Investorfile's share price accumulation target of $0.75 for Boardwalktech Software Corp. was initially reached on January 5th, 2021.

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