Technology

Bankers

Gregory Kouvelas

Senior Managing Director, Technology Investment Banking

Mr. Gregory Kouvelas joined National Securities Corporation as a Senior Managing Director of Technology Investment Banking. Previously, Mr. Kouvelas served as a Senior Banker at Wunderlich Securities, Seven Hills Partners, ING and Robertson Stephens. In addition, Mr. Kouvelas also has experience as a consultant at Andersen Consulting (Accenture) Strategic Services Group and an executive at a Silicon Valley software startup. Mr. Kouvelas earned an MBA in Finance from the University of Chicago Booth School of Business and an AB from Harvard University.

Technology Sector Expertise

National has built a robust banking practice across the massive technology industry, including in exponentially growing sectors like software, internet apps, social media, hardware, data mining platforms and fin tech, as well as large crossover segments like 3D printing, self-driving cars and the Internet of Things (IoT). Our banking team’s capabilities center on capital raising activities, primarily through private placements for early stage companies, as well as investment funds and SPVs dedicated to well-known tech “unicorns,” both in primary and secondary markets.

While we sometimes displace traditional VC investors, we also co-invest alongside them to support the development, market penetration and adoption of promising technologies.

Completed Transactions

Analysts

Ilya Grozovsky

Managing Director, Equity Research

Ilya Grozovsky is the Managing Director covering the Technology sector. Ilya’s focus on technology includes software, cloud computing infrastructure and applications. Ilya is a seasoned analyst with over 15 years of experience on both the sell-side and the buy-side, working for firms such as ING, JP Morgan, SoundView Technology Group, MAC Investment Management, and Morgan Joseph & Co. He holds the FINRA Series 7, 63, 86, and 87 licenses and received his Bachelor of Arts in Economics from the University of Maryland.

    Matthew Galinko

    Senior Equity Research Analyst

    Matthew Galinko joined National Securities in June 2018 as a Senior Equity Research Analyst covering Technology and focused on the Internet of Things. Matt has covered the technology sector since 2007, including small cap at Sidoti & Company and multi-cap at Battle Road Research. Matt earned a B.A. in Economics, minor in Business, and led the investment club at Brandeis University.

      Technology Sector Coverage

      Technology research coverage at National focuses on sub-sectors such as software as a service (SaaS), the Internet of Things (IoT), and other unique opportunities in tech. The technology analyst team looks for companies with unique products, a growing market opportunity, expanding market share and recurring revenues. All types of valuation methodologies are used, with a consistent eye toward profitability.

      Aqua Metals, Inc. (AQMS: Buy, $10 PT)

      November 8, 2018– The company continues to refine the four modules that are in service in order to get the process to a positive margin contribution. We believe that the improvements to the process are not a matter of inventing new science but rather all process improvements in the material recapture (the main goal is to adequately recapture the process components). As a result, we believe that these are achievable goals that management has laid out. Their timeframe for this is year-end 2018 and we think is reasonable to expect these goals be met by then.





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      Datawatch Corp. (DWCH: Neutral)

      November 5, 2018– This morning Altair Engineering Inc. (NASD: ALTR-NR,-$34.10) announced that it has entered into a definitive agreement to acquire Datawatch. Altair has offered Datawatch shareholders $13.10 in cash for each Datawatch share, a 35% premium to the previous day’s closing price. The transaction is expected to close in the fourth quarter of 2018.
       While our price target on Datawatch shares was $17 which was based on a comparable company analysis, given that the Datawatch board has approved this transaction we believe that the deal will close and as a result are downgrading our rating on Datawatch shares to NEUTRAL.





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      Digimarc Corp. (DMRC: Buy, $43 PT)

      November 1, 2018–  Yesterday, after the close of trading, Digimarc Corp. reported its September quarter results. Revenues in the quarter were $4.9 million essentially in-line with our estimate and compared to $5.4 million in the previous quarter and $5.1 million in the year ago quarter (when excluding a one-time license payment).





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      Digital Turbine, Inc.. (APPS: Buy, $3.50 PT)

      November 6, 2018– Yesterday, after the close of trading, Digital Turbine reported its September quarter results. Revenues in the quarter were $24 million compared to our estimate of $23 million and compared to $22 million in the previous quarter and $16 million in the year ago quarter. Importantly, after several quarters of sequential gross margin declines, this quarter saw non-GAAP gross margins improve 2.4% sequentially to 34.6%. The company reported adjusted EBITDA of $1.6 million compared to our estimate of $0.4 million and better than the $0.2 million in the previous quarter and $0.5 million in the year ago quarter.





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      Energous Corp. (WATT: Buy, $35 PT)

      October 31, 2018–Yesterday, after the close of trading, Energous Corp. reported its September quarter results. The company generated $0.2 million in revenues in the quarter in the form of milestone payments and chip royalties, in line with our estimate and unchanged from the previous quarter. Adjusted EBITDA in the quarter was a loss of $9 million which was greater than our estimate of a loss of $8 million and up from the previous quarters loss of$8 million and up from the loss of $8 million in the year ago quarter.





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      I.D. Systems, Inc. (IDSY: Buy, $8.60 PT)

      November 9, 2018–IDSY reported 3Q:18 Non-GAAP EPS of $0.01 and revenue of $13.4 million, which compared to our estimates for breakeven on $12.3 million. We were in-line with consensus.





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      InterDigital, Inc. (IDCC: Buy, $103 PT)

      November 2, 2018– IDCC reported 3Q:18 Non-GAAP EPS of $0.40 on revenue of $75.1 million, beating our estimate for $0.20 on $65.0 million although note that our estimates did not include expected contribution from Technicolor, which IDCC owned for two months of 3Q:18.





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      Kopin Corporation (KOPN: Buy, $2.40 PT)

      November 8, 2018–  KOPN’s 3Q:18 revenue was lower than we expected by about $2 million, attributed in part to tariffs and market conditions muting demand. Full year revenue guidance was reduced by$5.5-$8.5 million prompting us to bring our estimate down to $25.3 million from $31 million.





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      Mitek Systems, Inc. (MITK: Buy, $17.50 PT)

      November 2, 2018–Yesterday, after the close of trading, Mitek Systems reported its September quarter results. Revenues in the quarter were $21.0 million compared to our estimate of $19.5 million and compared to $16.1 million in the previous quarter and $13 million in the year ago quarter. Revenues in the quarter were driven by strong sales of the Mobile ID product line which grew 79% year over year in the quarter and accounted for 28% of the revenues.





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      Nano Dimension Ltd. (NNDM: Buy, $7 PT)

      October 15, 2018– This morning, Nano Dimension reported preliminary September quarter results. Revenues in the quarter are expected to be $1.6 million, slightly ahead of our expectations of $1.5 million and up from $1.1 million in the previous quarter. No other financial data was released, but we believe that quarterly cash burn was in line with our expectations ($3 million) and that quarter ending cash could approximate over $8 million.





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      Progress Software Corp. (PRGS: Buy, $50 PT)

      September 28, 2018– We maintain a BUY rating and $50 price target, based on 17.5x (previously 17x) our new 2020 non-GAAP EPS estimate of $2.85 (previously $2.93). The higher multiple reflects increasing ratable revenue. With shares indicating a steep decline, we think this offers a good opportunity to accumulate shares.





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      Ribbon Communications (RBBN: Buy, $10 PT)

      October 31, 2018– RBBN beat our estimates and raised full year guidance. Non-GAAP revenue of $158.7 million, adjusted EBITDA of $29 million, and Non-GAAP net income of $21.9 million compared our estimates for $138.1 million, $24.9 million, and $21.9 million respectively. Non-GAAP 2018 revenue guidance was lifted to $610 million from $580 million on a $20 million contribution from the acquired Edgewater Networks business and the rest strength in the core business. We lifted our 2019 revenue estimate by about $10 million and our EBITDA estimate by about $1 million.





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      Resonant, Inc. (RESN: Buy, $8 PT)

      August 10, 2018– Yesterday, after the close of trading, Resonant reported June quarter results. Revenues in the quarter were $0.1 million compared to our estimate of $0.3 million and compared to$0.2 million in the previous and year ago quarters. Four devices contributed to revenues in the quarter. Resonant added two new customers in the quarter bring the total to 10 customers. Importantly, one of the new customers, while unnamed, we believe to be a tier 1 filter manufacturer which would signify large volumes of production in the future.





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      Xperi Corporation (XPER: Buy, $31 PT)

      November 8, 2018–  XPER reported 3Q:18 billings of $100.6 million and billings-based Non-GAAP EPS of $0.63, compared to our estimates for $97.9 million and $0.46, respectively. Guidance was for $97-$102 million of billings.





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