Playing The Working From Home Boom

Weekly Reports | Apr 08 2020

By Tim Boreham, Editor, The New Criterion

Stocks that benefit from the enforced working from home boom

Having been a euphemism for skiving off or perhaps minding sick kids, ‘working from home’ (WFH) has become not just accepted but a compulsory requirement - or imposition - for white collar workers.

Our tip is that, post COVID-19, divorce lawyers will emerge as the premier growth sector as working spouses see far too much of each other.

In the meantime, investors are running the ruler over stocks that stand to benefit, such as telcos and network providers and teleconferencing plays. Electronic goods houses JB Hi-Fi ((JBH)) and Harvey Norman ((HVN)) have made it known they are WFH winners - controversially in the case of Gerry Harvey

A lower key beneficiary is call recording pioneer Dubber ((DUB)) which is finding its groove in what Dubber chief Steve McGovern dubs the age of “unified communications.”

Call recording doesn’t sound like rocket science, with most call centre conversations routinely recorded. In reality, though, the recordings are sent to distant storage facilities and are difficult to retrieve.

After years of development, the Melbourne based Dubber has commercialised a cloud-based call recording platform that provides easy callback, transcription to text and data crunching such as “sentiment analysis”.

For example, if there a spike in the number of customers who say “your company sucks” or “I want to cancel my contract”, management will know they have a problem. To date, these valuable insights have been lost.

Dubber so far has signed up 123 telco customers including Telstra, Optus, Vodafone, AT & T and Sprint. Dubber is integrated into network giant Cisco System’s Cisco Webex Calling, a leading provider of cloud based calls.

On March 25 Dubber inked a deal with the Nasdaq-listed Verizon Communications to integrate Dubber into Verizon’s Virtual Communications Express product.

“In an economy where distributed workforces and working from home become more prevalent, this service enables key business features to be managed centrally while being instantly accessible globally on any device.”

The Dubber platform is essentially the same all over, but operates as platform as a service (PaaS) or Software as a service (SaaS).

Under the PaaS model, Dubber is the white label provider. In other words, the telco sells the product under its own brand.

With SaaS the telcos connect their network to Dubber and the parties jointly go to customers.

 “Most customers are choosing SaaS because of speed to market,” McGovern says. “As much as they would like get to market under their own brand (SaaS) reduces the time frame from 18 months to months or weeks.”

Dubber in February reported December (first) half revenue of $4.5m, up 125% and a loss of -$8.6m. Annual recurring revenue jumped 77% to $11m.

But the hockey-stick trend belies some disquiet.

In a report dated March 3, Morgans analyst Nick Harris opined that while Dubber was signing up telcos, the conversion of end customers to active users “remains slower than we would have liked”.

Dubber signed its pivotal deals with AT&T and Broadsoft (now part of Cisco) in August 2017.

As of March 20 Dubber claimed just over 150,000 users, double the numbers of a year ago and a 30,000 increase for the quarter.

But this growth emanates from new telco sign ups, rather than from the existing telcos’ existing customer bases.

“We acknowledge that it takes considerable time to move from relationship to billing … but we are disappointed to see that after several years revenue generation remains anemic,” Mr Harris says.

Dubber’s current half numbers will be more instructive, given they cover the corona crisis period.

Dubber this week seized on a mini share recovery to raise $10 million in a placement at 60 cents apiece. The shares closed at 80c before a trading halt and at the time of writing were holding up well.

The moral of the story is that when you’re a small cap there’s never been a better time to have money in the coffers.

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