logo-loader

Globo motoring in enterprise mobility market

Last updated: 01:30 26 Feb 2015 AEDT, First published: 02:30 26 Feb 2015 AEDT

byod

Globo's (LON:GBO) recent full year trading update showed a firm on a roll.

Revenues beat market expectations on organic growth and were up almost 50% to €106mln, while the mobile software specialist generated positive free cash flow for the third year in a row, it said, ending 2014 with €40.3 million, beating a Canaccord estimate of  €39.2mln.

Indeed, the broker estimates that Globo’s cash conversion, which has historically been a cause for concern by some, has progressed from 38% in 2013 to around 43% in 2014.

The mobile enterprise market, where businesses adopt mobile software, continues to drive momentum and the firm's Go!Enterprise product now dominates group sales - accounting for 54% of turnover last year - 42% in 2013.

In simple terms, Go!Enterprise, among other features, allows businesses and organisations to get all their data and applications onto the mobile devices of employees.

This is the big trend in workplace communications and is called BYOD (bring your own device).

Sales last year of Go!Enterprise rose an eye-popping 90% to close to €57mln in 2014, compared to €29.9mln in 2013, showing the traction it is gaining.

On the other hand, CitronGO! and GO!Social – Globo’s consumer mobile portfolio – technology which, among other things, collates users’ e-mail accounts in location and are social media focused, reported revenues of €38 million for the year – which was still an increase of 10% on 2013.

Notably, City broker Canaccord links the company’s improved cash generation since  2012 to a structural shift at the group.

It has moved from a business with a low-growth and long cash collection cycle (CitronGO!/GO!Social) to a high-growth and shorter cash collection cycle (GO!Enterprise), it says.

Speaking to Proactive, Globo founder and chief Costis Papadimitrakopoulos confirmed that enterprise mobility was the firm's key driver for 2015 and described the market as a "greenfield" growth opportunity.

He is particularly excited not just about pure BYOD uses within one enterprise but wider business to consumer (B2C) applications, which Globo's technology has not previously reached.

Put another way, these are individuals and groups outside one single business entity, but which need to connect with it.

"We're getting into the need to extend the functionality and the reach of applications towards the consumer or business associates," he said.

"Our platform offers all the tools to provide end-to-end connectivity and security to back end systems but even more we provide a mobile application development platform (MADP) which can be used to actually develop applications in one source code that can run in many different operating systems."

It is this "across the board, end-to-end" solution aspect, which sets Globo apart from competitors, he says.

"This is what customers want today. They don't want just to buy boxes, or want to buy licences to figure out how to build it. They want a solution that works, they want it on time and up-and-running," he said.

And momentum behind the overall enterprise mobile management market is growing. The IDC (International Data Corporation) reckons it will grow from US$798 million in 2012 to reach US$2.2 billion by 2017.

Significantly, the MADP market is expected by IDC to go from US$938.6 million in 2012 to US$4.8 billion by 2017 -  a 39% compound annual growth rate.

The US continues to be an important focus, with its huge potential customer base, and saw an increase in revenues last year, with US firm Notify Technology, which it acquired in 2013, contributing EUR 3mln or 8.7% of total growth for 2014.

Canaccord recently reckoned the firm's US$1.2mln order on an annual renewable basis struck last month with an existing customer was with Oracle, a key Notify customer.

The broker saw that as a "strong endorsement" of Globo's ability to grow within an acquisition's customer base.

Notably, there is still much headroom to sell further licences to Oracle as it has it has around 122,000 employees.

The broker also sees the Globo stock as considerably undervalued.

Adjusting for capitalised research and development (R&D), it says Globo trades on an enterprise value/EBITDA multiple for 2015 estimates of 3.5 times, compared to a blended peer group rating of around 14 times.

And looking ahead, Globo won't be sitting back. It expects to launch new features to its products at the Mobile World Congress in Barcelona next month and is already researching new areas to expand its offering.

These areas include the Internet of Things (IoT) and the mobile analytics space, where the group sees demand both from business and hardware vendors.

Globo shares currently stand at 48.75p.

Australian Strategic Materials signs US$600 million LoI

Rowena Smith, CEO and managing director of Australian Strategic Materials Ltd (ASX:ASM, OTC:ASMMF), joins Jonathan Jackson in the Proactive studio to discuss the company’ s Dubbo Project, in Central West New South Wales. This project aims to extract and process critical minerals and rare earth...

13 hours, 29 minutes ago