Canada’s emerging tech landscape has been buzzing with excitement in the last few years, as evidenced by the sheer number of TSX Venture Exchange companies that have reported significant growth. One such company, OneSoft Solutions Inc. (TSXV: OSS.V), more than doubled its stock value during the year despite capturing very little media attention. Let’s explore what OSS has to offer and whether it will remain a penny stock for much longer.
- Company: OneSoft Solutions Inc.
- Ticker: OSS
- Market Cap: $91.9 million
- Annual Revenue Growth: +77.1% (2018)
- Free Cash Flow: $80,000 (2018)
OneSoft — An Introduction
Founded in 1996, Edmonton-based OneSoft Solutions provides software services for select industries that employ Microsoft’s emerging suite of cloud technologies. The company helps businesses transition legacy systems and licensed software applications over to Microsoft Azure, one of the world’s fastest-growing cloud services.
Through its OneBridge subsidiary, the company employs machine learning and geospatial technology to conduct predictive analytics for the pipeline industry. In other words, OneBridge helps pipeline operators predict pipeline failures, lower costs, and meet regulatory requirements.
Back in February, OneSoft announced that a U.S. conglomerate had licensed OneBridge’s Cognitive Integrity Management (CIM) solution, a move that would open the door to higher recurring revenue. Although the client was not named, OneSoft said it was a large pipeline conglomerate operating mainly in the midwestern United States and Texas.
Further elaborating on the partnership without naming names, OneBridge President Tim Edward said: “Having previously developed an internal comprehensive on-premise software system to manage their pipelines, the Client is recognized as one of the most progressive pipeline operators in the U.S.A.”
OSS shares more than doubled in 2018, growing 113.6% to be exact. So far this year, the stock price is up another 92%.
The rally has shifted into higher gear since January when OneSoft announced solid financial results for its fiscal third quarter. The company reported revenues of $1.2 million in the nine months ended Nov. 30, 2018. For the three-month period, the company booked revenues of $508,732, an increase of 95.4% over year-ago levels.
And even in light of this growth, analysts believe there is plenty of room for OneSoft to keep going. Just last week, Beacon Securities analyst Gabriel Leung set a one-year price target of $1.75 for OSS. That’s nearly double the current price. Leung estimates that, with the latest client acquisition, OneBridge is on track for an annualized recurring revenue run-rate of up to $5 million. This would take the company from negative into positive cash flow operations. Investors should, therefore, expect deal momentum to accelerate throughout the year, leading to a higher stock price.
Although revenue growth hasn’t been a problem for OneSoft in the last five years, uptake of its CIM solutions should help ramp up sales for the foreseeable future.
OneSoft Solutions is bringing cloud capability and a proven Microsoft Azure platform to niche markets. At this rate, it won’t be a penny stock for very long.
Disclaimer: Author holds no investment position in OneSoft Solutions Inc. at the time of writing.