A newly listed IoT that can “connect anything, anywhere” is aptly called Direct Communication Solutions

It is now widely recognized that this decade will see a massive boom in the Internet of Things (IoT), worldwide spending on IoT is forecast to grow to US$1.1 trillion by 2023. By 2025 it is forecast that there will be 21.5 billion connected devices worldwide. A huge opportunity exists in the area of design and sale of smart software platform solutions (web based or phone Apps) that can help the customer view the data and respond as needed (often automatically and remotely).

And there is a company that offers to do just that and it is trading at a compelling valuation. The Company just listed on the OTCQB this month and the CSE earlier this year. That Company is Direct Communication Solutions Inc. (CSE: DCSI | OTCQB: DCSX) (“DCS”).

DCS offers clients end-to-end IoT solutions that are enabled by the latest technologies using a simple all in one cloud based platform. DCS’s platform combines IoT, 4G, cloud, Software-as-a-Service (SaaS), data analytics, Artificial Intelligence (AI) and sensor based monitoring.

DCS uses advanced software applications and databases that can analyze as well as manage the data that IoT hardware has collected. This provides businesses the opportunity to receive real-time data in order to make better decisions about their business.

DCS offers three simple to use platforms depending upon the client’s needs:

  • MiFleet is a GPS Fleet monitoring and tracking software. It offers multiple applications and cellular technology offerings. Some examples include tracking, logistics, proof of delivery, and fuel consumption.
  • MiSensors is a set-and-forget event based remote monitoring system. Sensors connect to a gateway, then to a network, then to a platform/mobile app. On the platform/mobile app you can see up to date information instantly. Applications are numerous and some example include monitoring and/or automation of factories, power plants, pipelines, network operations centers, transport services, airports, and even spacecraft.
  • Brewsee is a beer life cycle monitor and control system. It includes smart handling of temperature, CO2 pressure, inventory management, critical timing and prevent after hours pours or staff giveaways/waste and/or theft. The system can also combine digital signage integration and security system integration.

Brewsee is an all in one IoT management system for the hospitality industry

Direct Communications Systems has significant advantages over their competition. Their new, proprietary MiSensors product, fully deployed, and based on a recent use case of a similar platform can be delivered up to a 70% discount to the cost of competing solutions with a fraction of the time and effort. One MiSensor can do the job of 6 competing sensors. This saves clients time, effort and money. These benefits are making IOT platforms easier and cheaper to build and customers are starting to notice. Revenues have exceeded expectations since the company started building their own sensors and moved to a recurring revenue model.

While MiSensor’s is likely the most important initiative at DCS this year there is still so much more to tell. DCS garners sales through major Telcos like US Cellular, Sprint, and T Mobile. Telcos are incentivized to sell DCS services because a successful IOT platform helps sell more airtime. Furthermore, sales teams from Telcos get commissions to refer DCS products. Thus, marketing expenses are not a huge line item for the Company. When a Telco refers a client, that client is offered a one stop solution for their IOT needs. If you have ever tried to link your software to someone else’s hardware you will understand how hard this can be. Many customers complain there is no customized solution within the industry until they get to DCS. It is this END to END solution, linking software to hardware with customized platforms that is winning new business for DCS. Or as CEO of DCS Chris Bursey says: “Making life easier for our clients is our primary mission”.

DCS started out as a hardware reseller. When margins compressed in that industry, Chris Bursey made the decision to pursue a higher margin recurring revenue model. Today, close to 15% of the company’s revenue achieves a 70% EBITDA margin, and that number is expected to grow as clients everywhere begin to figure out they can save money, time and effort by switching to an, END to END service offering with customized solutions. As Chris Bursey was heard quoting recently: “There is endless opportunity in this industry for a team that can make the difficult job of connecting hardware and software easier, quicker and cheaper. We think DCS is in a prime position to execute on that promise. We can connect anything, anywhere.”

About Direct Communication Solutions Inc. 

Source

Why the undervalued valuation?

DCSX trades at a US $9m market cap, despite its US$16m in 2019 revenue. That is close to 0.5X 2019 revenue. Most IOT company’s trade at least 2x revenue. MCloud Technologies (TSX: MCLD) (MCLDF) is similar in sales and size of customer base and trades with a US$55m market cap. This under valuation of DCSX is an opportunity for investors. DCS’s public issuance happened at C$2.00 or US$1.40. From their US $1.40 IPO price, the shares have dropped to US$0.25 during the COVID-19 period and have since rebounded to US$0 .62. Improved volume suggests that the stock has rebounded from its lows and is now being accumulated. If DCSX were to trade at 2x revenue, like its peers, it would be a $34m market cap versus the $9m it trades at today.

Closing remarks

In summary, DCS offers cloud platform, data analytics, software as a service, remote sensor monitoring, and other related activities. The Company believes that they have a competitive advantage with their MiSensor able to do the job of 6 competing sensors. Valuation appears very compelling with a market cap of only 0.5X revenue.

As we rapidly move into the era of the IoT the demand for platforms that can simply help the customer with their business needs using smart end-to-end systems is going to be enormous. Software as a service companies usually trade on high multiples, which makes it all the better for investors who can get in early on DCS having only listed in early 2020.




Watch “a technology stock trading at 20%-25% of sales”

John McKimm, CEO, CIO, President and Director of Smart Employee Benefits Inc. (TSXV: SEB) (“SEB”), a company that provides SaaS and BPO health benefits processing solutions for corporate and government clients, in an interview with InvestorIntel Senior Editor, Jeff Wareham discuss as Jeff puts it an undervalued story with “a technology stock trading at 20%-25% of sales”. Over the past 15-18 months, SEB has completed a $22.5 million consolidation financing and has raised $7.2 million of equity, 80% of which is made up from insiders and existing shareholders. John explains SEB’s technology non-benefits and benefits division is now profitable and cash flow positive, which he believes will positively effect SEB’s share price and will get it back to where it was prior to the acquisition of Maplesoft Group in December 2015. He then goes on to state over the last year insiders and shareholders have bought over 80% of SEB’s stock and insiders, as well as himself, will continue to be key buyers in the company…to access the complete interview, click here 

Disclaimer: Smart Employee Benefits Inc. is an advertorial member of InvestorIntel Corp.

 




Smart Employee Benefits, a SaaS technology company poised for major growth

Every now and again, I stumble across a company with unbelievable growth potential which the market has almost completely ignored. Investor blindness is a common affliction, and is usually caused by some combination of choice paralysis and short-sightedness, but oftentimes the best investments are the ones that require detailed analysis and projection in order to get in at the low-point before the rabble have even noticed the opportunity.

Smart Employee Benefits Inc. (TSXV: SEB) (“SEB”) is a technology company providing world class solutions for automating and managing business processes for both private and government clients. The company has grown from start-up over the past six years, increasing revenues year-on-year, to reach a point of now having around 940 employees, generating over $100 million in sales, with over $500 million in backlog, annuity contracts and option year contracts and over 200 active clients relationships.

Additionally, the company has recently completed over $7m of equity financing, of which insiders and existing large shareholders acquired over 80%. The CEO and entities related to the CEO subscribed for over 40% of this financing. The company has restructured its debt with a major Canadian bank to significantly reduce interest charges reducing debt service in 2017 to less than 40% of forecast 2017 cash flow. Both business units have now moved to positive cash flow with strong sustainable growth prospects. Additionally, adjusted consolidated EBITDA in fiscal 2016 was in the $2.5m range, but is expected to increase over 500% over the next 18 months as a result of the streamlined financials and sales growth.

These massive improvements have not been reflected in the market, but rest assured, the company should soon be enjoying share values more akin to 2015 levels, if not higher.  The market capitalization is approximately $20.0M, down from the $50.0M to $60.0M range in 2015. Un believable!!

BACKGROUND

SEB has a very strong and growing “traditional” technology solutions and services business which provides a stable and profitable business base. It has utilized much of the cash flow from this base to create software and solutions focused on consolidating and automating the back-office business processes for managing employers and government sponsored health and pension benefits. SEB’s SaaS (Software as a Service) “benefits processing” solutions capture over 90% of these business processes, including the associated revenue. Typically, these processes are dispersed through multiple provider environments that do not talk to each other and create numerous opportunities for fraud and errors and results in poor reporting. SEB’s Processing solution are unique in the industry and address the fraud, errors and reporting issues. SEB’s solutions also have global application. SEB’s competitive advantage is:

“One Processing Environment – All Benefit Types – One Single Sign On Benefit Card”.

SEB has strategic technology partnerships with over fifteen global companies including two of the largest benefits consultants in the world and one of the largest global insurance companies. The company has invested over $25m in software and solutions for automating and managing the back-office processes for employer and government funded benefit programs. The solutions are all cloud enabled and delivered on a SaaS platform, and as such are infinitely scalable.

The company has reached a position of sustainable positive cash flow in fiscal 2016 which is expected to grow substantially in fiscal 2017 and beyond. The profit margins from this SaaS benefits processing business are multiples of its traditional business, with gross margins over 70% of revenue versus 19% in the traditional business. This benefits processing business unit is poised for major growth and is the primary driver of EBITDA growth in 2018 and beyond.

In Canada, this is an $81 billion market place growing at 4% – 8% per annum even in recession. Over 10% plus, of these premiums go to pay for processing. SEB solutions capture over 90% of these processing dollars when a client is fully implemented on the platform.

SEB’s target processing revenue is over $250/annum/plan member. Currently, SEB’s revenue is in the range of $44/per annum/ plan member. The company has launched an aggressive growth strategy to transition its existing clients to its total platform. SEB currently manages over 300,000 plan members on its various platforms.

Readers should begin to see why Smart Employee Benefits is a technology company that deserves their attention.

So why is nobody buying? Due to an acquisition in December 2015, SEB became laden with additional debt, resulting in a considerable fall in share prices. Net negative earnings, combined with seemingly unmanageable levels of debt, is enough to scare away any investor, but over the past 6 months., these issues have been dealt with. The details have not been well communicated to the market. The company is now launching an aggressive “investor awareness” program to broaden its shareholder base and help investors understand the hidden value in SEB. We believe this program, together with results, will have a very positive impact on the share price.




iSIGN antenna deal and CEO on mobile technology that can produce sales results

February 3, 2016 — In a special InvestorIntel interview, Publisher Tracy Weslosky speaks with Alex Romanov, President, CEO and Director of iSIGN Media Solutions Inc. (TSXV:ISD | “iSIGN”), a software-as-a-service (SaaS) company, about their recent smart antenna purchase order from We Build Apps. In the interview, Alex discusses how iSIGN’s recent deal may potentially be used at the upcoming Republican National Convention this summer and the advantages of their competitive technology. Supplying both the hardware and software for clients, iSIGN is able to gather point-of-sale data and mobile shopper preferences from mobile devices, which can perform a wide range of objectives, including the ability to quantify advertising budgets with results.

Tracy Weslosky: You just announced a deal for 500 antennas with a company called We Build Apps Is that correct?

Alex Romanov: Yes. They’re located in Cleveland, Ohio and they’re very well positioned to place us into transportation, convention centers, amusement parks and, of course, commercial areas.

Tracy Weslosky: I have a two-part question for you. I think I read that We Build Apps are positioning to be in the Cleveland Convention Center during the Republican National Convention. Can you tell me how they would use iSIGN Media antennas for in that particular application?

Alex Romanov: Well, several applications there. They’re connected with the convention center and the opportunity for them is the fact that it is happening in Cleveland sometime this summer. The idea there is to be able to identify mobile devices moving through the convention center and being able to message updates, messages regarding polls, et cetera and being able to poll recipients inside and the proximity of the convention center.

Tracy Weslosky: And, of course, I notice you describe yourself as a software-as-a-service (SaaS) company. Can you just explain to our audience what that means?

Alex Romanov: Yeah. A SaaS company is a company that will program, develop a software, in general, a software provision to provide a service. It might be any kind of a mechanical device — ours happens to be mobile.

Tracy Weslosky: So InvestorIntel audiences just hang in there with me because this is a very interesting technology. You’re going to be excited by the end of this I promise. So going back to We Build App and that particular deal, can you tell me a little bit more about the type of data that you’re able to collect and how iSIGN makes money?

Alex Romanov: Yeah, our data, most importantly, is anonymous. We don’t intrude on anyone’s privacy. We don’t need to have your phone number, your email address or your name to be able to identify your device, send it a message and ask you to opt in if you’d like to receive the message or not. That could be any kind of rich media, a video, a coupon or a thumbprint ad or a SMS message if you’d like, all in proximity.

Tracy Weslosky: Now, of course, I saw a consistent stream of sales generated last year. What was interesting to me with the Canadian dollar being at a 13-year low, most of your sales are with American companies and are in U.S. dollars and your expenses are primarily Canadian. Is that correct?

Alex Romanov: Absolutely. That’s one of the advantages this year. Whether you’re buying our services, buying our data or wanting to invest in our company it’s a really great advantage this year at this moment…to access the complete interview, click here

Disclaimer: iSIGN Media Solutions Inc. is an advertorial member of InvestorIntel.