Investment Thesis:

• Sizeable market opportunity – in the U.S. alone WSP TAM is US$4.7bn (WSP North American target markets) vs total U.S. CPaaS TAM of US$98bn.
• Established a solid foundation to build from – the Company has over 800 customers worldwide with leading brand names.  
• Structural tailwinds – ongoing automation and digitization. 
• Increasing direct sales penetration.
• Attractive recurring revenue base via subscriptions. 
• Investment in R&D to continue developing the Company’s competitive position and enhance value proposition with customers.   

Key Risks:

• Rising competitive pressures.
• Growth disappoints the market, given the company trades on high valuation multiples – growth in subscriptions, new customers and penetration of existing clients. 
• Product innovation stalls and fails to resonate with customers. 
• Emergence of new competitors and technology.
• Key channel partnerships breakdown. 

Key Highlights: Headline FY22 results. Group revenue of $70.6m was up +48% YoY and ahead of management’s guidance range of $64-68m. Management noted the Company is seeing growing interest in the Whispir platform from governments and government agencies, as highlighted by the recent high-profile launch by Victoria Police of the public transport initiative “STOPIT”, which is built on the Whispir platform. 

• Regional performance – ANZ region was up $22m (or +56%) to $62m revenue for FY22, which was driven by the pandemic response (Covid-19 vaccine rollout programs). North America revenue was up +38% to $1.8m, with management highlighting growth opportunities in this market and WSP’s investment in digital marketing campaigns to drive revenue growth. Asia revenue of $6.7m was mostly flat YoY due to the region still being impacted by Covid-19 related disruptions and lockdowns (e.g., fresh China lockdowns in July). However, WSP recently signed contract with telco Singtel should drive growth in the region.
• Customer churn of 2.1% was +30bps better than 2.4% in pcp. 
• Group gross margin (GM) was down -130bps to 58.5%, due to change in revenue mix – that is, a higher revenue contribution from transaction revenue which has lower GM than platform and services. On a positive note, GM on transaction revenue also improved +250bps over the year (with further improvement expected), whilst GM on platform and services was unchanged YoY.
• Group operating earnings (EBITDA) for the year was a loss of $10.6m, which was ahead of the guidance which was looking for a loss of $11.2 – 13.2m for FY22. EBITDA building blocks: ANZ $16.1m + Asia loss $2.5m + North America loss $4.7m + R&D cost $16.2m + Corporate costs $11.9m. Management is “firmly” focused on becoming EBITDA positive by 2H23. Operating expenses in 4Q22 were -11% below 3Q22, driven by efficiencies program.
• Balance sheet remains well placed with $26.1m in cash and no debt, which should take the company to profitability in FY23 and cash flow positive by FY24.

Company Description:

Whispir Ltd (WSP), founded in 2001, is a global enterprise software-as-a-service (SasS) company. WSP provides a communications workflow platform that automates interactions between businesses and people. The Company has over 800 customers, operates in 60 countries and more than 200 staff globally. WSP operates in an emerging subset of the enterprise communications SaaS market known as Workflow Communications-as-a-Service (WCaaS). WSP currently solves two communication problems: (1) Operational Messaging – engaging with employees; and (2) External Messaging – engaging with customers. WSP operates in 3 key markets – Operational messaging (size $8bn), API messaging (size $32bn) and Marketing messages (size $66bn). 

(Source: Banyantree)

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