Phunware’s Strong Q1 Bookings and Debt-Free Position Reinforce Buy Rating

Analyst Darren Aftahi from Roth MKM maintained a Buy rating on Phunware (PHUN – Research Report) and keeping the price target at $20.00.

Darren Aftahi has given his Buy rating due to a combination of factors centered around Phunware’s promising beginning to fiscal year 2024. He notes the strong bookings in the first quarter, which amount to approximately 60% of the total bookings for the previous year. This surge in bookings is attributed to both new customer acquisitions and expansions within existing client relationships. Aftahi expects this upward trend to continue as the year unfolds, bolstered by Phunware’s strategic sales investments, improved cash position, and absence of debt. This foundation sets the stage for enhanced revenue predictability for the second half of the year, with optimism for a resurgence in growth by the fourth quarter.

Additionally, Aftahi is encouraged by the balance of new customer and expansion bookings, which he believes will contribute positively to both visibility and margins. Phunware’s focus on the hospitality vertical is seen as a key driver, with potential for a multiplier effect as the company scales and targets larger properties. The solid financial footing, characterized by a cash reserve of approximately $21.6 million and no debt, further underpins the Buy rating. While the company’s digital asset strategy remains to be fully unveiled, the primary valuation is anchored on the core business prospects, leading to a maintained price target of $20, based on 25 times the projected sales for FY24.

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Phunware (PHUN) Company Description:

Phunware, Inc. engages in the development of a Multiscreen-as-a-Service platform, an enterprise cloud platform for mobile. It provides companies the products, solutions, data, and services necessary to engage, manage, and monetize mobile application portfolios and audiences at scale. Its platform also allows for the licensing and creation of category-defining mobile experiences for brands and their application users worldwide. The company was founded by Alan S. Knitowski and Luan Dang in February 2009 and is headquartered in Austin, TX.