Dev Clever Holdings PLC (LON: DEV): H1 FY21 sales skyrocketed by around 531% 

Dev Clever Holdings PLC (LON: DEV) is a UK-based software development company focused on integrating cloud-based VR and gamification technologies across both the education and commercial sectors. Moreover, the Company has two reportable business segments – Educate & Agency. Under the Educate division, DEV delivers career guidance services through its online platform, Launchyourcareer.com. 

Growth Prospects

• Collaboration with Aldebaron DMCC: Under the partnership, the National Careers Challenge (“NCC”) would be launched in the UK on 30 September 2021. Moreover, the Indian NCC would be anticipated to launch by the first half of 2022.
• Acquisition of TILG: DEV had completed the acquisition of The Inspirational Learning Group Limited (“TILG”). Furthermore, the career programs developed by TILG will be utilized in the launch of the National Career Challenge.
• Project with Common Service Centre ("CSC") Academy in India: The wholly-owned subsidiary of DEV, i.e. Veative Labs Pvt Ltd, had partnered with CSC for the initial pilot project.
• Capturing Significant Market in India: DEV had signed a five-year exclusive partnership agreement with Veative and NISA and customized Launchyourcareer.com platform according to the relevance for the Indian markets.

Key Risks

• Closure of Academic Institutions: The prolonged closure of schools and test centres can cause liquidity risk.
• Reputational Damage: Failure to deliver tests & assessments and other related contractual requirements because of operational headwinds might result in the reputational damage of DEV.
• Technological Advancement: The failure to integrate the latest technology in digital learning tools may impact the brand reputation of the Company.
• Changing Market Dynamics: If the industry fails to attract, develop, and retain key creative commercial and management talent, it could lose business. In the long-term, it needs to enhance the skills of its people and needs to constantly innovate.

Now, we will analyse the Key Fundamental Statistics & Shareholding Pattern of Dev Clever Holdings PLC.

Jeffries (Christopher Michael) is the most significant shareholder as it holds nearly 152.11 million shares as of 30 June 2021. 

H1 FY21 Financial & Operational Highlights (for the six months ended 30 April 2021, as of 05 July 2021)

 (Source: Company result)

• The significant contract wins in the Educate division had taken revenue to show an impressive jump of around 531% to £2.4 million during H1 FY21.
• The Company had managed to narrow down the net loss from negative £584 thousand during H1 FY20 to negative £294 thousand for H1 FY21.
• With regards to the balance sheet, the Company had improved the net cash position from £0.47 million during H1 FY20 to £9.68 million for H1 FY21.
• DEV had successfully raised £15.0 million of net proceeds from fund raising activity completed during the period.

Financial Ratios (H1 FY21) 

Share Price Performance Analysis

 (Source: Refinitiv; Analysis done by Kalkine Group)

On 02 September 2021, at 09:16 AM GMT, DEV’s shares were trading at GBX 32.55, up by around 3.33% from the previous day closing price. Stock 52-week High and Low were 47.90 and GBX 6.00, respectively.

From a technical perspective, the MACD line remained above the signal line, indicating an upside potential in the stock price. Moreover, the 200-days exponential moving average of GBX 27.65 is also supporting the upside momentum in the stock price.

Over the last one year, DEV’s stock price has delivered a positive return of ~283.73%, and it has outperformed the FTSE Technology index (benchmark sector) with a return of about 125.92%.

Valuation Methodology: Price/Sales Approach (NTM) (Illustrative)

Business Outlook Scenario

The Company had reported outstanding H1 FY21 results with robust growth in top-line revenue and narrowed down the losses to a larger extent. Moreover, the collaboration with Veative and NISA would expand the Company’s footprints in the emerging Indian ed-tech space. On an optimistic note, DEV believes that the financial performance would surpass management’s expectations during FY21. The recent contract wins had enabled DEV to commercialise the core EdTech platforms. In a nutshell, the Ed-Tech industry would continue to grow as there would be a potential of around USD 11.50 trillion to be added to the global GDP by 2028 by bridging the skillset gaps through the enhancement and development of the educational ecosystem.

Considering the robust sales growth during H1 FY21, recent contract wins, robust liquidity profile, improved cash position, bright industry prospects, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on Dev Clever Holdings PLC at the current price of GBX 32.55 (as on 02 September 2021 at 09:16 AM GMT), with lower-double digit upside potential based on 19.99x Price/NTM Sales per share (approx.) on FY21E sales per share (approx.). 

*The reference data in this report has been partly sourced from REFINITIV.

*All forecasted figures and Peer information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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