SMART EMPLOYEE BENEFITS INC (SEB.V) research, news, and more from GeoInvesting

Company description

Mon, 19 Oct 2020 16:50:37 GMT

SEB is a technology company providing Business Process Automation and Outsourcing software, solutions and services to a national and global client base. SEB has a specialty growth focus in cloud enabled SaaS processing solutions for managing employer and government sponsored health benefit plans on a BPO (Business Processing Outsourcing) business model, globally. SEB currently serves corporate and government clients across Canada and internationally. Over 80% of SEB's revenues derive from government, insurance and health care organizations. SEB's technology infrastructure of over 650 multi-certified technical professionals, across Canada and globally, is a critical competitive advantage in supporting the implementation and management of SEB's benefits processing solutions into client environments. SEB's Benefits Processing Solutions can be game changing for SEB clients. The core expertise of SEB is automating and managing business processes utilizing SEB proprietary software solutions combined with solutions of third parties through joint ventures and partnerships. SEB's client acquisition model in benefits processing is "Channel Partnerships" where SEB processing solutions both improve cost structures and enable new revenue models for Channel Partners and clients. All SEB solutions are cloud enabled and can be delivered on a SaaS platform. SEB solutions turn cost centers to profit centers for our Channel Partners.

Research

Fri, 18 Feb 2022 15:12:35 GMT

Smart Employee Benefits Inc (NASDAQ:SEBFF) (SEB.V) ($0.24; $41.8M market cap), a SaaS company focused on delivering administrative solutions (mainly HR/insurance solutions) to corporations, has been awarded 3 new contracts and 1 renewal contract.

New 3-year contract for 155,000 investment accounts to provide payment processing services for the TELUS Health virtual healthcare app.
New 5-year deal with a new multinational corporate client, representing 2,300 plan members, to provide Benefits Administration services.
New 5-year contract to provide design, set up and administration services for a white-labeled “digital retiree health insurance product” for a large national benefits consulting channel partner, underwritten by one of the largest group and life Insurers in Canada.
Renewal: 5-year renewal of an existing high-technology client to provide benefits administration on a fully outsourced basis, for approximately 4,500 employees.

The CEO commented:

“We are thrilled with these wins, especially those that are driven by our innovation agenda and help us venture into new markets. This demonstrates the breadth of our solutions, the depth of our services and the flexibility and adaptability of our products.”

This release was announced shortly after the market opened yesterday.

Research

Mon, 07 Feb 2022 15:04:44 GMT

Smart Employee Benefits Inc (NASDAQ:SEBFF) (SEB.V) ($0.23; $40.1M market cap), a SaaS company focused on delivering administrative solutions (mainly HR) to corporations, has been awarded a contract extension valued at $5 million. This comes on the heels of last week's contract announcement win, bringing contract wins and extensions to over $43 million in Q1 2022.

“SEB’s RFP sales pipeline includes tens of millions of dollars of contract value where decisions are pending over the next several months.”

Research

Thu, 03 Feb 2022 18:12:29 GMT

Smart Employee Benefits Inc (NASDAQ:SEBFF) (SEB.V) ($0.16; $28.1M market cap), a SaaS company focused on delivering administrative solutions (mainly HR) to corporations, has been awarded new contracts valued in excess of $38M.

“These contracts extend out as long as 6 years including option years with the majority of revenue realized in the 2 to 4 year range. These contracts are all net new business and adds to SEB’s recurring revenue contract value, increasing this value to over $450.0M.”

Comments from CEO:

“We continue to experience increasing demand in all 3 business lines, IT Services “ITS”, Business Process Services “BPS” and Professional Services “PS” and across all 6 practices – Cloud Computing, Digital Solutions and Services, Enterprise and Cyber Security, Data Management, Business Process Outsourcing and Project Services. These new contract wins reflect the effectiveness of our operating model to be responsive to market drivers, customer needs and provide the efficiency and value extraction to win in an increasingly complex market conditions. We are very pleased to see our growth momentum continue with this strong start to 2022. This builds on the record wins of $140.0M in 2021.”

Credit Facility:

“To support its growing business the Company has entered into an amending agreement with its lender with respect to its $10,000,000 revolving credit facility to amend the definition of the term Borrowing Base therein, thereby allowing the Company to increase the utilization under such credit facility.”

In yesterday's open forum we also discussed what we are still looking for with SEB:

On April 29, 2021 we hosted a virtual presentation with Smart Employee Benefits management and highlighted our key takeaways, here. On April 30, 2021 we added SEBFF/SEB.V to our Run to One and Select Long model portfolios.

Research

Wed, 01 Dec 2021 18:03:03 GMT

Smart Employee Benefits Inc (NASDAQ:SEBFF) (SEB.V) ($0.16; $28.1M market cap), a SaaS company focused on delivering administrative solutions (mainly HR) to corporations, announced it has signed $140 million in recurring revenue contracts in 2021.

Visibility:

“The majority of the new signed contracts are related to RFP (Request for Proposal) competitive bids. SEB’s RFP win rate in the past 12 months is >65%, an increase from >50% in fiscal 2020 and >30% in 2019. Our RFP win rate has been steadily increasing since 2019. RFP wins together with our Channel Partner client acquisition transactions are steadily growing our contract values. Today we have visibility on over 90% of 2022 forecast revenues. Over 80% of 2022 forecast revenue is contracted for the subsequent 4 years with contract terms as long as 9 years. In addition, we have over $120.0M of contract value in our sales pipeline where decisions are pending in the next 6 months.”

Higher Margin Contracts:

“the mix of revenues between Services and Software/Solutions is evolving quickly. In fiscal 2021, Software/Solutions revenue comprised approximately 30% of revenues with Services the remaining 70%. This is up from a mix of 8% and 92%, respectively, in fiscal 2016. Although, Software/Solutions and Services revenues are intricately linked, each dependent on the other to a large degree, gross margins in Software/Solutions exceed 70% versus the 17% in Services.”

Business mix improving:

“The evolution of SEB’s sales mix to focus on Software/Solutions has increased consolidated gross margin from 17.6% in fiscal 2016 to 36.9% in the first 9 months of fiscal 2021. SEB’s objective is to increase the sales mix to over 40% Software/Solutions in the next 24 months. This will have an obvious impact on gross margins, positive cash flow and EBITDA. Today, over 80% of every new gross margin dollar goes to profitability and cashflow. As of Q3 2021, SEB has recorded six straight quarters of positive EBITDA this trend is expected to continue in 2022 and beyond.”

Outlook remains strong:

“Our sales pipeline is the strongest it has ever been. Our technology and people solutions are leading edge and highly cost-effective in driving the digital transformation journey for our clients in the public, enterprise and emerging market segments.”

Research

Fri, 26 Nov 2021 15:30:27 GMT

In news related to Smart Employee Benefits Inc (NASDAQ:SEBFF) (SEB.V) ($0.18; $31.8M market cap), a SaaS company focused on delivering administrative solutions (mainly HR) to corporations, they are officially shown as having uplisted to the OTCQB, something that we’ve been waiting for. You can see this at the company’s profile here - https://www.otcmarkets.com/stock/SEBFF/overview

Research

Tue, 02 Nov 2021 18:34:02 GMT

Smart Employee Benefits Inc (NASDAQ:SMEYF) (SEB.V) ($0.18; $31.8M market cap), a SaaS company focused on delivering administrative solutions (mainly HR) to corporations, announced Q3 2021 results:

Sales of $15.4 million vs $14.6 million in the prior year
Adj EBITDA of $0.59 million vs $1.09 million (includes covid relief aid)
EBITDA of $0.46 million vs $0.49 million
Net loss of $1.0 million vs net loss of $1.0 million

Sticky revenue stream:

“Approximately 80% of 2021 forecast consolidated revenue streams are under contract for the next 4 years representing >90% for Benefits Solutions revenues and >70% for Technology Services revenue. The Company’s growth focus is on the higher margin Benefit Solutions revenue, although Technology Services revenue is also experiencing solid growth. The operations including sales and marketing initiatives, finance and accounting and technology support and delivery were largely integrated in fiscal, 2020.”

Channel partner expansion to drive revenue growth:

“Relationships have been consolidated and grown with multiple new business partners. The Company’s Channel Partner strategy has gained strong traction with more than a dozen active negotiations with Channel Partner opportunities including brokerage organizations, MGAs, TPAs, insurers, unions, and corporate entities. Several LOIs and LOAs have been executed with revenue growth expected in late 2021 and beyond from the Channel Partner business initiatives.”

Focus on improving profitability:

“Going forward, the capital expenditures are minimal, the cost structure from acquisitions and integrations has been largely realigned and both the Technology Services and Benefits Solutions are anticipated to show strong growth and positive cash flow in 2021 and beyond. Today approximately 80% of every new GM dollar will go to cash flow and EBITDA in both revenue streams. The contract values including backlog, option years and evergreen remain strong, with the Company continually renewing or winning sufficient new business to replace annual revenues. Over 98% of 2021 targeted revenues are under contract with over 80% of 2021 revenues under contract for the next 4 years.”

On April 29, 2021 we hosted a virtual presentation with Smart Employee Benefits management and highlighted our key takeaways, here. On April 30, 2021 we added SMEYF/SEB.V to our Run to One and Select Long model portfolios.

We are still waiting for the company to catalyze the positive developments management has been discussing. Although we were hoping to see some of the growth initiatives already materialize, we are excited to see the company start monetizing its growing predictable backlog

Interviews

Tue, 24 Aug 2021 04:00:00 GMT

VIRTUAL PANEL with Smart Employee Benefits (OTC:SMEYF) (SEB.V) SNN Summer Virtual Event

Maj Soueidan once again got a chance to speak with John McKimm, Smart Employee Benefits (OTC:SMEYF) (SEB.V) CEO, President & CIO, as well as the company’s Chief Operating Officer, Mohamad El Chayah during Bobby Kraft’s SNN Network Summer Virtual Event held August 17 to 19, 2021. Smart Employee Benefits Inc is a Canadian technology company providing software-enabled services in the areas of healthcare transaction processing, software solutions, and professional services for corporate and government clients.

Please see the session below to catch up on current initiatives SEB.V is embarking upon and to get a more in-depth refresher on what they do and their plans moving forward.

Research

Mon, 02 Aug 2021 14:37:46 GMT

Smart Employee Benefits Inc (NASDAQ:SMEYF) (SEB.V) ($0.27; $45.9M market cap), a SaaS company focused on delivering administrative solutions (mainly HR) to corporations, announced Q2 2021 results:

Sales of $16.0 million vs $15.4 million in the prior year
Adjusted EBITDA of $1.0 million vs $670,121 in the prior year
Nel loss of $789,871 vs net loss of $1.47 million
Backlog is very large with high visibility

Key positive to the report:

Year over year and sequential revenue and EBITDA growth

Some negatives:

Delay in contract renewals. However, the company expects to resolve by year’s end
Even though the company has done a good job at restructuring the balance sheet, we would lto see a further reduction in its debt burden.

Our overall opinion is that we believe the stock will be worth multiples over its current price once investors understand that most of the company’s revenue is recurring and tied to long-term contracts.

Some highlights from the press release:

"The Benefits revenue stream experienced a positive $971,562 Adjusted EBITDA and $762,881 EBITDA versus a positive $29,179 during the same time frame of the previous year. This trend is expected to continue in the second half of fiscal 2021, as growth is experienced in both revenue streams...

...Technology Operations have been historically cash flow positive and net new business wins remain strong. The Benefits Operations are just now becoming cash flow positive after considerable investments in technology and business infrastructure. Both operations are expected to have continued strong sustainable growth going forward. Signed contracts (backlog, evergreen, option years), based on a 5-year time frame are valued at over $400M, of which over $100M is Benefits Operations. Over 80% of 2021 consolidated revenue targets are expected to be recurring over the next 4 years, with additional recurring revenue going out as long as 9 years. Since November 30, 2020, the Company has won approximately $68.0M of net new contracts, including option years, over 25% of which are Benefits Operations...

...The consolidated sales pipeline is the strongest it has ever been. The cost savings initiatives taken over the past several years were largely experienced in 2020 with minimal improvements continuing in 2021. We are anticipating improved consolidated financial performance in the 2021 fiscal year vs. 2020, particularly in the Benefits Operations...

...The Company has established strong traction in multiple new business initiatives and is well positioned to win new business going forward.”

The company will be hosting its second quarter 2021 conference call on Thursday August 5th at 11:00 AM EST. We look forward to the call to see if management offers more color on its business initiatives and growth plans.

On April 29, 2021 we hosted a virtual presentation with SEB management and highlighted our key takeaways, you can see that here. On April 30, 2021 we added SEB to our Run to One and Select Long model portfolios.

Research

Mon, 14 Jun 2021 17:38:39 GMT

PodClip --

Stock has doubled, should we keep it?

*Stock is still ridiculously cheap, given

100% recurring revenue
3 to 7 year visibility in backlog that stands at $400M vs. 2020 revenue of $60.6

*Approaching break even

*EV/S

1.19

*Price Potential at 4 to 8 EV/S = $1.38 to $2.78

Research

Tue, 01 Jun 2021 18:26:27 GMT

Smart Employee Benefits Inc (NASDAQ:SMEYF) (SEB.V) ($0.19; $32.3M market cap), a SaaS company focused on delivering administrative solutions (mainly HR) to corporations, was awarded new contracts valued at $27.0 million, bringing total new contracts for first half of 2021 to $69 million.

The contracts are all net new business wins and add to SEB’s recurring revenue contract value...

...Today we have visibility on over 80% of 2021 revenues over the next 4 years with contract terms as long as 9 years and contract values in excess of $400M. In addition, we have over $100.0M of contract value in our sales pipeline where decisions are pending in 2021...

...These net new contract bookings reflect the effectiveness of our operating model in responding to customer needs in providing the efficiency and value to win in increasingly complex markets. Our sales pipeline is the strongest it has ever been.

On April 29, 2021 we hosted a virtual presentation with SEB management and highlighted our key takeaways. You can see that here. On April 30, 2021 we added SEB to our Run to One and Select Long model portfolios.

Research

Thu, 06 May 2021 17:39:57 GMT

Smart Employee Benefits Inc (NASDAQ:SMEYF) (SEB.V) ($0.17; $28.6M market cap) announced:

“...has been awarded multiple net new contracts valued in excess of $42.7M during the first 4 months of fiscal 2021.... Today we have visibility on over 80% of 2021 revenues over the next 4 years with contract terms as long as 9 years and contract values in excess of $400M.”

SEB is a SaaS company focused on delivering administrative solutions (mainly HR) to corporations. Their bread-and-butter business is in helping companies administer their insurance plans.

Research

Fri, 30 Apr 2021 04:00:00 GMT

Smart Employee Benefits Inc (NASDAQ:SMEYF) (SEB.V) - SEB is a SaaS company focused on delivering administrative solutions (mainly HR) to corporations. Their bread-and-butter business is in helping companies administer their insurance plans.

Yesterday, we hosted a virtual presentation with SEB’s CEO and COO. A replay of the video will be posted later today.

We are adding SEB.V/SMEYF to our Run to One Model Portfolio. We do think patience will be required as the company is not profitable yet and quarterly revenue can be lumpy. However, the stock trades at an EV/S of 0.76, compared to where we think it could eventually trade, well over an EV/S of 4.

Our key takeaways from yesterday's live call includes:

Substantially all rev is recurring
Contracts are very long-term which creates great visibility
Deep recognizable customer base
True one stop shop platform solution
Reverse split coming soon will improve the shares outstanding optics which currently stand at 170 million (near 200 million, fully diluted).

Last night, after the call, the company also released its Q1 2021 results:

Sales of $14.3 million vs $16.5 million in the prior year
Adjusted EBITDA of $670,121 vs a loss of $56,324 in the prior year
Loss of $0.01 vs loss of $0.01

It's important to note that the company has been focusing on higher margin revenue, which is partly why revenues were down for the quarter. The quarter was also negatively affected by contract delays that will drop in the second quarter.

Some highlights from the press release:

The first quarter, 2021 is the fourth straight quarter of positive EBITDA and Adjusted EBITDA... Continued positive growth is targeted for the remainder of fiscal 2021 and beyond.

SEB has made significant investments in both the Technology and Benefits Solutions revenue streams since the Company’s inception. Building the business and technology infrastructure, while a time consuming and costly process, has created significant values with blue chip and government clientele and strong strategic partnerships in both revenue streams.

The Benefits revenue stream experienced a positive $108,402 EBITDA versus a positive $30,019 during the same time frame. This trend is expected to continue in 2021, as growth is experienced in both revenue streams.

Technology Operations have been historically cash flow positive and net new business wins remain strong. The Benefits Operations are just now becoming cash flow positive after considerable investments in technology and business infrastructure. Both operations are expected to have continued strong sustainable growth going forward.

The consolidated sales pipeline is the strongest it has ever been. The cost savings initiatives taken over the past several years were largely experienced in 2020 with minimal improvements continuing in 2021. We are anticipating improved consolidated financial performance in the 2021 fiscal year vs. 2020, particularly in the Benefits Operations.”

Selected Disclosures on Above-mentioned Stock(s):

We are adding SEB.V, SMEYF to our long disclosures today

GeoTeam's Longs

Other Select Longs

Active Mock Portfolios

Micro-cap Run to One Model Portfolio: SEB.V, SMEYF

Interviews

Fri, 30 Apr 2021 04:00:00 GMT

Fireside Chat with Business Process Automation Company Smart Employee Benefits

Smart Employee Benefits is focused on delivering administrative solutions (mainly HR) to corporations. Their bread-and-butter business is in helping companies administer their insurance plans.

What caught our eye is the potential turnaround now underway. The company has been historically unprofitable, but in the words of the CEO, this was first driven by the need to develop the business and then transform it to achieve most of the perceived opportunity without having issues with competitors.

Now the performance started to improve as the company is signing new clients. Due to the scalability of the business, the CEO believes they could achieve strong profitability already this year. Moreover, this profitability should be stable as over 80% of the current revenue is contracted for at least the next four years.

If the business starts to execute and generate free cash flow, the current valuation would be wholly inappropriate. Even at just 1x P/S which would be woefully low for a growing and profitable SaaS play, the stock would already double.

Contributor Articles

Sat, 06 Feb 2021 19:20:14 GMT

Update on Smart Employee Benefits (SEB.V, SMEYF) by Tom Birnie

SEB received 20 million in funding from the Co-operators in December 2020. This large insurance company plans to use SEB’s benefit software solutions and has already signed contracts. In SEB’s Q2 conference call CEO John McKimm says:

“So our strategic partner, investor partner, we have quite a bit of new business we've signed and moving ahead on that and new business pending.”

On January 28th RCMP also awarded a contract to SEB to provide Group Insurance Administration Services to over 40,000 plan members.

There is important information arbitrage in SEB’s AGM transcript notes from October 2020 that can help estimate the growth expected in the benefits division over the next 12 to 18 months. In the CEO’s presentation he explains

“On our Benefits Division, this is primarily benefit processing and insurance infrastructure. The revenue for 2021 is primarily contracted business, which does not include new pipeline sales opportunities. We currently have contracts over $100 million multiyear. Our sales pipeline is also over $100 million of identified opportunities, either bid or will be bid in 2021.”

$100 million in contract revenue translates into around $30 million per year or 100% growth in benefits division revenue. With fixed costs now covered, management says that 50% of each new dollar of revenue is expected to drop to EBITDA. This implies a triple digit rate of growth in the bottom line as well. SEB is already generating strong free cash flow.

SEB is up 65% since the original research report was published for GeoInvesting back in October 2020 but I believe it still remains extremely undervalued. Triple digit growth ahead should continue to provide good returns for shareholders. You can read the SEB research report here: