Growens (BIT: GROW) Research Update

Highlights:

• Arrowhead is updating its coverage on Growens S.p.A. with a fair value bracket of €6.69 – €8.17 (Share Price on June 27, 2023: €6.40) based on Discounted Cash Flow Valuation and Comparable Company Valuation.
• Growens S.p.A. (“Growens” or “the Group”) is a vertically integrated Cloud Marketing Technologies business operating in two business lines: CPaaS, represented by a leading SMS technology company, Agile Telecom, and SaaS made up of four businesses: BEE, Datatrics, MailUp + Contactlab, and Acumbamail, in the areas of Content Design, Marketing Analytics, and Multi-Channel Marketing Automation.
• Growens signed a binding agreement to sell its MailUp + Contactlab and Acumbamail business units (collectively Email Service Provider) to TeamSystem S.p.A. for a total consideration of €70 million. The approximate timeline to complete the transaction is the end of June 2023.
• Growens is focused on developing new capabilities and features for BEE through increasing R&D, sales, and marketing efforts and by acquiring businesses that complement BEE. The Group plans to invest most of the proceeds from the sale of the Email Service Provider business to fast-track BEE’s development.
• Agile Telecom is the Group’s largest business with 370+ telecom partnerships worldwide. The company is focusing on marketing its platform to onboard new customers. Agile is likely to continue being the Group’s top cash generator over the coming years and the principal source of growth capital for the Group’s other companies.
• BEE is likely to be Growens’ principal growth driver going forward, with significant growth expected in the coming years. BEE is currently the Group’s fastest-growing business unit with 59.0% YoY revenue growth in 2022 and 25.2% YoY in Q1’2023. Growens expects BEE to become its flagship business going forward and continue growing significantly to become a €10 million to €15 million sales business in the next few periods.