What happened
Shares of software outfit BTRS Holdings (BTRS) -- better known as Billtrust -- were up by 13% as of 11:59 a.m. EST Monday. Its shares have been steadily on the decline since the SPAC merger that brought the company public in January. However, an analyst at JPMorgan Chase (JPM 0.49%) recently rated the stock a buy and put a price target of $15 on it -- implying some 60% upside from where it's trading now.
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So what
Billtrust provides cloud-based software for billing and payments, helping its customers save time and money compared to traditional invoicing and check-acceptance methods. The company reported 27% year-over-year revenue growth in its software and payments business in Q2 2021 to $24.6 million. But with a market cap of upwards of $2.5 billion earlier this year, expectations were high for Billtrust.
To boost its long-term prospects, last month, it acquired Belgium-based business-to-business digital payments specialist iController for $58 million. That will give Billtrust a larger presence in Europe, and help support its efforts to expand its gross profits by a percentage in the high 10% to low 20% range in the coming year.
Now what
Billtrust will deliver its third-quarter report on Wednesday. Management previously said to expect net revenue of $128 million at the midpoint of guidance for full-year 2021, which represents an 18% increase over 2020. Adjusted gross profit margin should be in the 70% to 71% range, although adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) will likely be a loss of between $14 million and $16 million.
Currently, Billtrust stock trades for just under 12 times expected 2021 sales, giving it a market cap of $1.5 billion. At that level, it's not exactly a cheap software stock. However, if it can continue growing at a double-digit percentage pace and make further progress toward profitability, it could be a long-term value in the greater digital payments and software-based bill management space.
