QUIS Q4/19 Results & Outlook; MSFT FQ3/20 Shows Multiple Surges


  • QUIS reported 2019 revenue of $18.5M (+47% y/y), with gross margin of $7.9M (43% margin) and adj. EBITDA of $1.3M (7% of revs). For Q4/19, revenue $5.4M (cons: $5.5M) (+39% y/y), with gross margin of $2.3M (43% margin) and adj. EBITDA of $0.78M (14.5% margins) (Cons: $0.6M) (excl. discretionary bonus expense of $0.46M). There was no revenue contribution from Menlo in Q4/19.

  • QUIS provided positive preliminary Q1/20 guidance for revenue of ~$10.9–11.1M (Cons: $10.0M), gross margin of ~$4.1–4.3M, and adj. EBITDA of ~$1.0-1.2M (Cons: $1.4M). This includes Menlo, but no LedgerPay revs which should start ramping in Q2/20 (all values in US$ unless otherwise noted).

  • MSFT reported FQ3/20 revenue of $35.0B (+15% y/y) (Cons: $33.8B), and EPS of $1.40 (+23% y/y) (Cons: $1.27). Azure revenue grew 59% y/y (+61% in constant currency). CEO Satya Nadella commented on seeing “two years’ worth of digital transformation in two months” and helping customers adapt to “a world of remote everything”.

  • In this note, we also look at the continuing cloud war between Microsoft Azure and Amazon AWS, and how much the two combatants are spending on capex to keep up with the secular surge in demand.


  • We expect more LedgerPay announcements as QUIS works through its pipeline. Future deals could be a mix of SaaS-based revenue and annual license with maintenance and support.

  • QUIS will report Q1/20 results towards the end of May.


On 2021E consensus estimates, QUIS is trading at an EV/Sales and EV/EBITDA of 2.4x/17.2x (fully diluted) versus its North American IT Services and Global Payment Technology comparables trading at 1.5x/11.1x and 5.5x/14.0x, respectively.

We believe QUIS’s consulting business should trade in-line with IT Services companies at 1-1.5x EV/Sales, and 10-12x EV/EBITDA, and LedgerPay should trade in-line with Fin Tech companies at 5-6x EV/Sales, and 13-15x EV/EBITDA. Using a sum-of-the-parts calculation on 2021E estimates for QUIS yields a valuation in the $0.73-1.46 range (vs. $0.69-1.41 prev).