OneSoft Solutions Quick Update - $OSS.v

Quick update after Q3 2023

Price: $0.76 CAD

MC: 93.5 mil CAD

EV: 89.2 mil CAD

1 year performance:

OSS reported last week and held a call. Results were ahead of my expectations and the stock was up about 15% since.

Quarter Recap

• Revenue up 33% yoy

  • Now at 7.5 mil YTD

  • Guidance is for 10.1 mil in 2023

• Gross margin at 77%

  • They reiterated their gross profit guide of 7.6 mil

• EBITDA just a hair negative

• Post q end they collected 2.3 mil of the outstanding receivables

This chart below is quite important to the thesis thus far.

Call Notes

Before getting into the specifics, I think it’s quite valuable to listen to the call yourself. OSS is rare in the sense of how much they try to engage investors to help them understand the story.

• Pipeline miles generating revenue is out of their control and hard to predict

  • Customer choose how much to ingest into CIM

• Internal corrosion module progressing

  • It is commercialized and expecting revenue in 2024 from this

• Crack management mvp released in Q4 2023

• Geohazard bending strain in private preview right now

  • This will be broken down into 3 phases

• External corrosion is progressing

  • Also broken into phases

  • They are expecting some revenue in 2024

• Risk management in private preview now

• Still working on multiple opportunities Internationally

• Going to update their TAM in Q4 2023 or Q1 2024

Closing Thoughts

Though it’s taken longer than I expected, they are executing well on the piggable pipeline miles. They are the best game in town for customers and are well known in the industry.

The next big needle movers are the Risk Management, Internal Corrosion and External Corrosion modules. This will replace customers legacy on-prem products. For this they will leverage C-FER risk models. Internal and External Corrosion is able to serve the non-piggable miles of pipeline. This is multiples of the piggable miles of pipe, so it’s huge once it’s commercialized. I would assume the incremental adoption of these modules will be much faster than the existing product.

Having said all that even with 50% growth in 2024 the stock is trading at about 6x revenue. I feel the long term potential of OSS is worth the high valuation, though position size should be managed to your comfort.

Thanks for reading.

Dean

* long OSS.v