Technology

Bankers

Gregory Kouvelas

Senior Managing Director, Technology Investment Banking

Mr. Gregory Kouvelas joined National Securities Corporation as a Senior Managing Director of Technology Investment Banking. Previously, Mr. Kouvelas served as a Senior Banker at Wunderlich Securities, Seven Hills Partners, ING and Robertson Stephens. In addition, Mr. Kouvelas also has experience as a consultant at Andersen Consulting (Accenture) Strategic Services Group and an executive at a Silicon Valley software startup. Mr. Kouvelas earned an MBA in Finance from the University of Chicago Booth School of Business and an AB from Harvard University.

Technology Sector Expertise

National has built a robust banking practice across the massive technology industry, including in exponentially growing sectors like software, internet apps, social media, hardware, data mining platforms and fin tech, as well as large crossover segments like 3D printing, self-driving cars and the Internet of Things (IoT). Our banking team’s capabilities center on capital raising activities, primarily through private placements for early stage companies, as well as investment funds and SPVs dedicated to well-known tech “unicorns,” both in primary and secondary markets.

While we sometimes displace traditional VC investors, we also co-invest alongside them to support the development, market penetration and adoption of promising technologies.

Completed Transactions

Analysts

Ilya Grozovsky

Managing Director, Equity Research

Ilya Grozovsky is the Managing Director covering the Technology sector. Ilya’s focus on technology includes software, cloud computing infrastructure and applications. Ilya is a seasoned analyst with over 15 years of experience on both the sell-side and the buy-side, working for firms such as ING, JP Morgan, SoundView Technology Group, MAC Investment Management, and Morgan Joseph & Co. He holds the FINRA Series 7, 63, 86, and 87 licenses and received his Bachelor of Arts in Economics from the University of Maryland.

    Matthew Galinko

    Senior Equity Research Analyst

    Matthew Galinko joined National Securities in June 2018 as a Senior Equity Research Analyst covering Technology and focused on the Internet of Things. Matt has covered the technology sector since 2007, including small cap at Sidoti & Company and multi-cap at Battle Road Research. Matt earned a B.A. in Economics, minor in Business, and led the investment club at Brandeis University.

      Technology Sector Coverage

      Technology research coverage at National focuses on sub-sectors such as software as a service (SaaS), the Internet of Things (IoT), and other unique opportunities in tech. The technology analyst team looks for companies with unique products, a growing market opportunity, expanding market share and recurring revenues. All types of valuation methodologies are used, with a consistent eye toward profitability.

      Aqua Metals, Inc. (AQMS: Buy, $10 PT)

      August 9, 2018– Yesterday, after the close of trading, Aqua Metals reported June quarter results. Revenues in the quarter were $0.5 million, slightly lower than our estimate of $0.7 million, and down from the previous quarter’s $1.7 million. We are reducing our price target to $10 from $15 on AQMS shares. Given the increased share count, the result of the recent equity financing, and delays in fully implementing the other modules which reverberates through our model, leads us to reduce our price target to $10 from $15. We are maintaining our BUY rating on AQMS shares, we believe that Aqua Metals’ disruptive lead recycling process will change the way that lead acid batteries are recycled domestically and ultimately in many international countries.





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      Datawatch Corp. (DWCH: Buy, $17 PT)

      July 19, 2018– Yesterday, after the close of trading, Datawatch reported its fiscal third quarter, ending June, results. The company reported non-GAAP revenues of $12.9 million compared to our estimate of $11.7 million and compared to $11.1 million in the previous quarter.





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      Digimarc Corp. (DMRC: Buy, $43 PT)

      August 6, 2018– On August 1, after the close of trading, Digimarc Corp. reported its June quarter results. Revenues in the quarter were $5.4 million essentially in line with our estimate and compared to $5.6 million in the previous quarter and $5.6 million in the year ago quarter. Digimarc’s barcode technology is currently being tested at Wegmans and we believe that enough items are on the shelves so that Digimarc can begin the process of analyzing the ROI (return on investment) for Wegmans.





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      Digital Turbine, Inc.. (APPS: Buy, $3.50 PT)

      August 10, 2018– Yesterday, after the close of trading, Digital Turbine reported its June quarter results. Revenues in the quarter were $22 million compared to our estimate of $23 million and compared to $21 million in the previous quarter and $15 million in the year ago quarter. The lackluster launch of the Samsung Galaxy S9 dampened the results in the quarter, though we would note that despite this, revenues grew 45% year over year.





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      Energous Corp. (WATT: Buy, $35 PT)

      August 6, 2018– On August 1, after the close of trading, Energous Corp. reported its June quarter results. The company generated $0.2 million in revenues in the quarter in the form of milestone payments and chip royalties, this compares to revenues of $0.2 million in the previous quarter, and our projection of revenues of $1 million in the quarter.





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      I.D. Systems, Inc. (IDSY: Buy, $8.60 PT)

      August 27, 2018– We are initiating Coverage Of I.D. Systems, Inc. with a BUY rating And $8.60 price target. IDSY is an unsung contender in the market for Industrial IoT (IIoT). IDSY has a significant platform selling fleet telematics, with an increasing focus on logistics visibility. It also has the market leading position in industrial truck management (on-campus telematics). We think this business will increasingly favor the larger scale vendors with mature software products and allow IDSY to capture market share.





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      InterDigital, Inc. (IDCC: Buy, $103 PT)

      August 3, 2018– IDCC reported 2Q:18 Non-GAAP EPS of $0.40 on revenue of $69.6 million, beating our estimate for $0.22 on $65.0 million. Guidance was for $63 to $67 million revenue and did not take into account the $2 million contribution from non-current royalties.





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      Mitek Systems, Inc. (MITK: Buy, $17.50 PT)

      August 28, 2018– Yesterday, after the close of trading, Mitek Systems announced that its CEO, Jim DeBello and CFO, Jeff Davidson, are leaving the company at the end of December and end of November, respectively. We believe that these management changes, while unrelated, create some uncertainty in the company, as changes at the top always do. Though we believe that given the market share of mobile deposit the business essentially runs itself. We believe that the company could benefit from some new blood and vision at the top and assuming the replacement is of top caliber we would hope that would come to pass.





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      Nano Dimension Ltd. (NNDM: Buy, $7 PT)

      August 7, 2018–Yesterday, Nano Dimension reported its June quarter results. Revenues in the quarter were $1.1 million, in line with our estimate and compared to $0.6 million in the previous quarter. June quarter revenues were comprised of outright sales of 7 printers, one newly leased printer, a previously leased printer, and some ink sales. We had been anticipating 5 or 6 printers sold.





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      Progress Software Corp. (PRGS: Buy, $50 PT)

      September 28, 2018– We maintain a BUY rating and $50 price target, based on 17.5x (previously 17x) our new 2020 non-GAAP EPS estimate of $2.85 (previously $2.93). The higher multiple reflects increasing ratable revenue. With shares indicating a steep decline, we think this offers a good opportunity to accumulate shares.





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      Resonant, Inc. (RESN: Buy, $8 PT)

      August 10, 2018– Yesterday, after the close of trading, Resonant reported June quarter results. Revenues in the quarter were $0.1 million compared to our estimate of $0.3 million and compared to$0.2 million in the previous and year ago quarters. Four devices contributed to revenues in the quarter. Resonant added two new customers in the quarter bring the total to 10 customers. Importantly, one of the new customers, while unnamed, we believe to be a tier 1 filter manufacturer which would signify large volumes of production in the future.





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      Xperi Corporation (XPER: Buy, $31 PT)

      September 6, 2018– We are initiating coverage of Xperi Corporation with a BUY rating and a $31 price target. We think the valuation implies an overly pessimistic view of IP business. XPER has historically traded around 18x forward non-GAAP earnings, which at current levels implies an EPS reduction from $2.37 in 2018 to around $0.91 in 2019-2020. We argue the product business alone could contribute around $0.80 by 2020, suggesting it would require a nearly complete failure of the IP business to render today’s valuation rational. XPER’s existing licenses, track record of successful assertion processes, and attractive next generation semiconductor packaging technology know-how makes this scenario improbable. We think the valuation leaves much of the upside and limited downside.





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