Phunware is a high-growth business selling technologies to enterprises to enhance their engagement with customers over mobile platforms. Its vision is far greater, revolving around a cryptocurrency-based ecosystem that allows individuals to be compensated for the use of their data, and to earn rewards for engaging with incentives and rewards programmes. The launch of a utility token, as well as a regulated security token, will be the first by a US-listed company (NASDAQ in this case), potentially creating a noteworthy valuation disconnect between Phunware’s current market capitalisation of $197m and the value of its holdings in PhunToken and PhunCoin. Our DCF analysis indicates an implied fair equity value of c.$222m.
- Mobile engagement growing strongly: Phunware’s patented mobile engagement and location-based services technologies sit within a comprehensive Multiscreen-as-a-Service (MaaS) product suite. FY21 saw several contract wins in the healthcare vertical, while a major deployment at Atlantis, Bahamas, went live.
- Strong revenue growth in prospect: Guidance issued alongside the FY21 results anticipates YoY revenue growth in excess of 250% in each of 1Q22 and 2Q22, continuing the strong momentum seen in 2H21. We forecast revenue growth of 120% in FY22 and 37% in FY23, driven by backlog and a strong pipeline across verticals.
- Immense breadth of vision: Phunware’s longer-term vision is far-reaching, encompassing a cryptotoken-based ecosystem that allows consumers to control and monetise their personal data, which has become a valuable commodity, yet is today typically accessed by the global technology platforms free of charge.
- PhunToken and PhunCoin could ultimately dominate group valuation: Phunware currently retains 72% of PhunCoin and over 90% of PhunToken in issue – so the total value of the currency ecosystem could create a major valuation disconnect and become a primary driver of the value of Phunware.
- Investment summary: Management has created exposures to a series of high-growth segments: mobile apps, big data, blockchain and cryptocurrencies. Decentralisation and disruption are primary common strands. The core mobile platform remains well-positioned, with over 15bn IDs created to date, which creates a compelling starting point for potential PhunToken and PhunCoin mainstream adoption amid a crowded global cryptocurrency landscape.
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