Ten reasons why this is a great buy

[admin]

• The market for software defined communication cloud platforms is growing fast. Much bigger Twilio is growing at 77%, Pareteum grew at 129% in Q3.
• IoT will give another fillip to revenue growth.
• The shift to the cloud is in the very early innings, with most of the market served by legacy company solutions on premise. Northland analyst Michael Latimore believes 90% of the addressable market is still served by legacy on-premises software today
• Pareteum has a SaaS platform business model that almost invariably commands very high valuations on Wall Street, anyware from 5x to 20x sales.
• Pareteum seems particularly well placed, given the rapid progress the company has made on basically any metric. Revenue doubled from Q1 to Q3, 18 months ago it had 4 customers, now it has more than 100, Three-year backlog exploded from $147M at the end of 2017 to nearly $700M at the end of February 2019, etc.
• The explosion in 3-year backlog gives great revenue visibility, Wall Street usually likes that.
• The business model contains strong inherent operational leverage. Revenue per employee went from $277K in Q3 2017 to $492K per employee in Q3 2018. It's almost like hooking customers up and collecting the rent. The acquisitions will bring this figure down again, but that's temporary.
• Customers are happy, the dollar net retention rate is 147%, for every dollar in contract they buy 47 cent more.
• The acquisitions of Artilium and iPass offer significant revenue and cost synergies.
• The company's shares are mis-priced due to unfamiliarity with the investing public. Selling at just 3x 2019 revenues, and with some assumptions (see here for a very detailed approach) about backlog conversion, it could very well be selling at just over 1x 2021 sales. We think 5x-10x sales would be more normal at the minimum, and believe we will get there when this name becomes more familiar with investors.