Sonasoft Corp (SSFT)

[rbirdy]

Hiring plans in quarterly earnings and what they mean for stock price:

“5. Any expected significant changes in the number of employees.

It is anticipated that Sonasoft will expand its team with the addition of three to five sales professionals, two to four project and product management professionals, and four to six AI engineering professionals.”

You wouldn’t hire these amount of reps unless you think they could generate at least 5x their salary. Running some conservative numbers, I’d say they predict to grow at least $10m in rev in the next 12-18 months.

Assuming zero churn of current business, this would put their total revenue at roughly $25m / year. This would be roughly 60% y/y growth in revenue.

Apply a 10x multiple on earnings puts the market cap at roughly $250m or 8.3x current stock price.
Therefore, a fair price for SSFT by end of 2021 would be approximately .83 / share.
At the high end of market valuations (like previous post “100x rev multiples”) > this would make the stock $8.3 which I think is a far stretch but shows the two potential ranges this could trade at in the future.