GetBusy – little Covid-19 impact will help the growth

Yet another of my Annual Recurring Revenue models – GetBusy (LON:GETB) looks to me to be a potential winner.

This year it is likely to report yet another operating loss but much reduced.

It is also likely to announce a further rise in its revenues, boosting even more on an ever-growing ARR percentage.

GetBusy is a document management software business. It provides highly secure forms of digital document distribution, workflows and client chat. Its product offering includes Virtual Cabinet and SmartVault.

The Virtual Cabinet is document management software focused on the medium size to enterprise size content management (ECM) markets. It is used by 27 of the top 100 accounting firms in the United Kingdom and 22 of the top 100 firms in Australia and New Zealand.

SmartVault product is document management software targeting the professional small and medium enterprise (SME) market. Its platform is used by over 20,000 accounting and business professionals.

The Company has operations across the United Kingdom, United States, Australia and New Zealand.

It has over 120 employees, has some 1.5m plus portal users and over 65,000 paying subscribers for its services.

The group’s declared mission is “to make people productive and happy” – which is, of course, a very good basis for any business.

With some 48.9m shares in issue the group is capitalised at just under £30m. Directors and family own around 30% of the equity.

Professional investors include Business Growth Fund (14.50%), Fidelity Management (9.90%), Hargreave Hale (7.78%), Garraway Capital Management (5.52%), Herald Investment Management (3.21%), and Fidelity (Canada) Asset Management (0.24%).

Since 2016 the group has gradually increased its revenues from £7.76m to £12.66m last year, when it advanced by 15% on its revenues of which 90% are annually recurring – that is what excites me about this little company.

As it continues to expand its operations its income base is so very important.

Forecasts are for £13.76m this year and £15.03m next year – all the time pushing that ARR figure higher.

Brokers estimate that this year could well see the group halving its losses from £1.18m in the year to end December 2019, to a £0.58m shortfall and then reducing that again next year to just a minus £0.36m figure.

The group’s shares peaked at 75.5p at the end of February this year, before falling away to 43.5p in mid-March. The subsequent climb back to the current 60p has been gradual.

What will help the shares climb higher still is investor consideration of the company’s Covid-19 Update two weeks ago – “We are fortunate that our subscription business model is inherently resilient to the challenges that many businesses are currently facing.  Whilst we naturally expect disruption to the appetite of some prospective customers to adopt new technology at this time, we regard the current international lockdown as a catalyst that potentially accelerates the trends of remote and digital working that are helpful to our business in the medium and long term”.

I now set a one-year Target Price of 75p.