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.

      AudioEye, Inc. (AEYE: Buy, $12.50 PT)

      May 15, 2019– Yesterday, after the close of trading, AudioEye reported its March quarter results. Revenues in the quarter were $2 million, in line with our estimate and compared to $1.8 million in the December quarter and $1.1 million in the year ago quarter. Adjusted EBITDA for the quarter was a loss of $1.5 million, higher than our estimate of a loss of $0.6 million and higher than the previous quarter’s loss of $0.8 million.






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      AzurRx BioPharma, Inc. (AZRX: Buy, $9 PT)

      June 11, 2019– We are initiating coverage of AzurRx BioPharma, Inc. with a Buy rating and a 1-year target price of $9, which is supported by a DCF analysis using a 30% discount rate and a 5 multiple of the terminal value for the projected 2030 EBITDA of $470 million, calculated using an annual MS1819 cost of $18,000 in the US, consistent with the price of the market dominating pig derived pancreatic enzyme replacement therapies (PERTs). We base our valuation on US sales from MS1819 in exocrine pancreatic insufficiency (EPI) associated with cystic fibrosis (CF) and chronic pancreatitis (CP), with any ex-US commercial success from MS1819, or any commercial success from the early stage beta-lactamase program, serving as upside to our valuation.






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      Aqua Metals, Inc. (AQMS: Buy, $6.60 PT)

      May 10, 2019– Yesterday, after the close of trading, Aqua Metals reported March quarter results. Revenues in the quarter were $0.4 million, slightly lower than our expectation of $0.7 million and down from the previous quarter’s $1.1 million and down from the year ago quarter’s $1.7 million.






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      Digimarc Corp. (DMRC: NEUTRAL)

      May 6, 2019– We are downgrading shares of Digimarc to NEUTRAL from BUY as a result of the stock appreciating above our price target of $43. We continue to believe that Digimarc is in front of a significant revenue opportunity for its barcode technology as evidenced by the recent agreement with Walmart (NYSE: WMT – NR $101.36) and the various partnerships and trials that the company has ongoing.






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      Digital Turbine, Inc.. (APPS: Buy, $4.50 PT)

      June 4, 2019– Yesterday, after the close of trading, Digital Turbine reported its March quarter results. Revenues in the quarter were $27.2 million compared to our estimate of $26.6 million and compared to $21.0 million in the year ago quarter. The company reported adjusted EBITDA of $3.3 million compared to our estimate of $1.9 million though down from the previous quarter’s $3.8 million (a seasonally strong quarter) and up from the year ago break-even.






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      Energous Corp. (WATT: Buy, $13 PT)

      May 1, 2019– Yesterday, after the close of trading, Energous Corp. reported its March quarter results. The company generated $66,500 in revenues compared to our estimate of $500,000 and compared to the previous quarter’s $56,000. Our revenue estimate assumed some research and development offset payments, which did not materialize in the quarter as we had expected. Adjusted EBITDA in the quarter was a loss of $8 million, which was better than our estimate of a loss of $9 million and unchanged from the previous quarter’s loss of $8 million and down from the year ago quarter’s loss of $9 million.






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      I.D. Systems, Inc. (IDSY: Buy, $10 PT)

      May 3, 2019– IDSY reported 1Q:19 Non-GAAP EPS of $0.01 on revenue of $13.6 million, which compared to our estimates for a $0.04 loss on $12.7 million revenue. We net $1.4 million of non-recurring acquisition costs from the Non-GAAP EPS.






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      InterDigital, Inc. (IDCC: Buy, $96 PT)

      May 2, 2019– IDCC reported 1Q:19 Non-GAAP EPS of $0.13 on revenue of $68.6 million this morning, beating our estimate for $0.04 on $72.7 million. Our 1Q:19 estimate did not include a $5.8 million contra-revenue charge taken in 1Q:19. Note that revenue guidance was previously $70-$75 million. Backing out the revenue adjustment, IDCC would have reported approximately $74.4 million revenue and $0.31 of Non-GAAP EPS.






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      Inseego Corp. (INSG: Buy, $6 PT)

      May 9, 2019– INSG reported 1Q:19 Non-GAAP EBITDA of $2.1 million on revenue of $48.6 million, which compared to our estimates for $1.9 million on $47.9 million of revenue. Gross margin dipped to 30.4% from 33.3% year over year and 35.3% sequentially as component shortages and expenses to transition to a new contract manufacturer weighed on results.

      Kopin Corporation (KOPN: Buy, $2.00 PT)

      May 7, 2019–  KOPN reported a 1Q:19 Non-GAAP loss of $0.12 on revenue of $5.5 million, which compared to our estimates for a $0.09 loss on $6.2 million of revenue. Industrial and consumer revenue outperformed our estimate whereas military was lighter than we expected.






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      Mitek Systems, Inc. (MITK: Buy, $20 PT)

      May 2, 2019– Yesterday, after the close of trading, Mitek Systems reported its March quarter results. Revenue in the quarter was $20 million compared to our estimate of $19 million and compared to $18 million in the previous quarter and $14 million in the year ago quarter. Revenues in the quarter, which grew 36% year over year, were driven by strength in both mobile check deposit and mobile ID verification segments.






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      Model N Inc. (MODN: Buy, $23 PT)

      May 8, 2019– Yesterday, after the close of trading, Model N reports its March quarter results. Revenues in the quarter were $35 million compared to our estimate of $34 million and compared to $35 million in the previous quarter. Revenues were driven by solid growth in SaaS subscriptions and the company added as many new customers in the past two quarters as all of last year.






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      Nano Dimension Ltd. (NNDM: Buy, $1.80 PT)

      February 4, 2019– On Friday Nano Dimension announced that it raised much needed cash through a public offering. The company raised at least $12 million and could raise as much as $36.6 million with the overallotment, the warrants, and rights that are attached to the shares are exercised.






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      OneSpan (OSPN: Buy, $23 PT)

      May 8, 2019– OSPN reported a 1Q:19 Non-GAAP per share loss of $0.07 and revenue of $47.6 million, which compared to our estimates for $0.01 on $47.1 million of revenue. Hardware was higher in the mix, eSignature software licenses were lower in the mix, and mobile app security had a light quarter; full year revenue and EBITDA guidance were reaffirmed.






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

      March 29, 2019– PRGS reported 1Q:F19 Non-GAAP EPS of $0.50 on revenue of $89.5 million, which compared to our estimates for $0.46 on $86.9 million revenue. Stronger OpenEdge license sales supported the outperformance. The implementation of ASC-606 caused significant volatility in the Data Connectivity segment, resulting in a year over year decline to $4.5 million from $6.0 million (with the 1Q:F18 figure reported in the prior revenue recognition standard).






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      Ribbon Communications (RBBN: Buy, $10 PT)

      May 3, 2019– RBBN does not guide quarterly, although indicated that 1Q:19 would experience more seasonality than 1Q:18. Indeed, $121.7 million of reported revenue was off 10% year over year, missing our estimate of $131.5 million and adjusted EBITDA of about breakeven missed our $9.2 million estimate.






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      Resonant, Inc. (RESN: Buy, $6.30 PT)

      May 9, 2019– Yesterday, after the close of trading, Resonant reported March quarter results. Revenue in the quarter was $0.1 million compared to our estimate of $0.2 million and compared to $0.1 million in the previous quarter and $0.2 and year ago quarter. Adjusted EBITDA of a loss of $6 million ahead of our estimate of $5 million and up from $5 million in the previous and year ago quarters.






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      RumbleOn Inc. (RMBL: Buy, $9.50 PT)

      May 15, 2019– Yesterday, RumbleOn reported its March quarter results. Revenues in the quarter were $223 million compared to our estimate of $210 million and compared to a pro-forma $176 million in the year ago quarter (when accounting for the impact of the AutoSport-USA acquisition, which closed on February 4, 2019).






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      ShotSpotter Inc. (SSTI: Neutral, $44 PT)

      May 10, 2019–  SSTI reported a 1Q:19 GAAP loss of $0.03 per share on revenue of $9.6 million, which compared to our estimates for a $0.01 loss on $10.0 million of revenue. The company added 12 net new miles to its gunshot detection network, which compares to 9 in 1Q:18 and 24 in 4Q:18. The first quarter is typically seasonally the slowest.






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      Sonim Corp. (SONM: Neutral, $17 PT)

      June 10, 2019–  SONM is a recent IPO with very limited trading and disclosed financial history. The company operates in a niche market for ruggedized, LTE-connected phones, which we believe will see increasing adoption in the coming years as these products are built into new use cases and applications. We think SONM’s high revenue growth, currently favorable competitive landscape, and emerging profitability/cash flow should be considered in valuing this company. Applying a 1.5x EV/Sales multiple to our 2020 revenue estimate of $220.1 million, we derive a $17 price target. With the limited upside implied, we initiate coverage with a NEUTRAL rating.






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      SharpSpring Inc. (SHSP: Buy, $20 PT)

      May 30, 2019–  Email marketing is the most cost effective way for small businesses and not-for-profit organizations to attract new customers and maintain existing customers. The average open rate is approximately 30% but increases to over 50% when it is a triggered email (essentially a follow up to some previous type of contact). Enterprises who are exploring the best ROI in their marketing continue to look to email as the primary form of contact.






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      Super League Gaming (SLG: BUY, $15 PT)

      May 15, 2019–  Yesterday, after the close of trading, Super League Gaming reported its March quarter results. Revenues in the March quarter were $0.2 million in line with our estimate and essentially unchanged from the year ago quarter. The company is still in the very early stages of what we believe will be multi-pronged revenue streams that should continue to ramp in 2019 but grow in earnest in 2020. Adjusted EBITDA was a loss of $3.4 million compared to our expectation of a loss of $2.8 million.






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      Xperi Corporation (XPER: Buy, $36 PT)

      May 9, 2019– XPER reported 1Q:19 billings of $104.3 million and billings-based non-GAAP EPS of $0.77, compared to our estimates for $103.5 million and $0.62, respectively. Guidance was for $102-$106 million of billings. Litigation expenses were significantly below our estimate.






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