Boxlight Stock Analysis


Business Description:

  • Makes and sells interactive education systems to schools

  • Products sold to over 1.2 million classrooms in 72 countries with the help of 1000+ global partners

  • Product are quite expensive but the acquisition of Sahara can reach a broader market with cheaper products


Catalysts:

  • Edutech sector is young and growing rapidly

  • Global smart education and learning market is estimated to grow from $182.8 billion in 2019 to $680.1 billion in 2027, a 17.9% CAGR

  • Acquisition of Sahara will open new markets for them

  • Government desire to upgrade public school system

  • Covid-19 and homeschooling has shown the importance of technology in education


Risks:

  • Fragmented industry with high competition

  • Most public schools in the US can’t afford their products without government assistance

  • Use of stocks as currency for acquisition and debt repayment


Financial Analysis:

  • Revenues of $28.9 million in TTM down from 33.0 million in FY19 (ended in December 2019) and $20.7 million in FY16

  • Operating loss of 8.36 million in TTM vs $8.06 million for FY19

  • Net loss of $10.4 million in TTM vs net loss of $9.40 million for FY19

  • Negative FCF of $5.00 million vs Negative $4.27 million for FY19

  • Balance Sheet

  • Total assets: $124 million ; total liabilities: $51.0 million; book value: $73.1 million

  • Cash: $9.62 million, debts: $22.3 million, current assets: $56.3 million, current liabilities: $31.2 million

  • 54 million shares outstanding vs 10.7 million in FY19

  • Financial data for Sahara:

  • Revenues of $108 million in 2019 with annual growth rate of 18% in the last five years

  • Net income of $9.05 million in 2019 with annual growth rate of 19% in the last five years

  • Book value of about $30 million

  • Sahara Acquisition Details:

  • Total Purchase price of GBP 74 million ($94.9 million) in preferred stock and cash

  • GBP $52 million in cash

  • GBP $22 million in preferred stocks


Valuations

  • My personal Biases:

  • Very Bullish on industry and company

  • Skeptic about the high share dilutions from stock compensations, using their stocks for acquisitions and convertible debts

  • Assumptions for base case:

  • With the big market potential, $100 million valuation seems justified with the current book value and cash flows from Sahara

  • We will go directly into an exit multiple analysis with focus on PS ratio for 2025

  • 12% annual growth in revenues with profit margins of 8% achieved in 2025

  • Bull case with extra 20% revenues in 2025

  • Bear case with 20% less revenues in 2025

  • Shares outstanding increases to 200 million

Conclusion

  • Undervalued if we look only at business potential with profitability in sight

  • Wall Street seems to underestimate the Sahara acquisition

  • But adding the factor of share dilutions, it doesn’t look attractive anymore

  • Since IPO in late 2017, market cap is up 145% but stock down 56% with over 400% increase in shares outstanding

Full analysis of Boxlight: https://ishfaaqpeerally.teachable.com/courses/662813/lectures/30831218


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