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.

      AudioEye, Inc. (AEYE: Buy, $12.50 PT)

      January 23, 2019– Solving The Web Accessibility Issue; Initiate Coverage With BUY Rating & $12.50 PT
      Yesterday, after the close of trading, AudioEye announced its preliminary December quarter results. Revenues are expected to be $1.8 million, in line with our estimate and compared to $1.5 million in the September quarter and $0.9 million in the year ago quarter. Cash at the end of the December was $5.7 million implying a cash burn of $0.4 million which is in line with our estimate as well. Importantly, management reaffirmed its previous 2019 guidance of revenues of $11 million to $13 million (we are currently estimating $11.4 million in revenues for 2019). Bookings of $3.5 million in the December quarter were a record for the company and more importantly, the $11.5 million in bookings for 2018 gives us visibility and comfort into our 2019 revenue estimate of $11.4 million. We continue to expect bookings to roughly double in 2019 to $20 million to $22 million from $11.4 million in 2018.






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

      March 1, 2019– Yesterday, after the close of trading, Aqua Metals reported December quarter results. Revenues in the quarter were $1.1 million, essentially in line with our expectation of $1.0 million and virtually unchanged from the previous quarter and up from $0.9 million in the year ago quarter. The company continues to conserve capital by only running a few modules at a time and for only a few days at a time as it continues to refine the process to generate a positive contribution margin. Adjusted EBITDA in the quarter was a loss of $7.8 million, essentially in line with our expectations and virtually unchanged from the previous quarter.






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

      February 22, 2019–  Yesterday, after the close of trading, Digimarc Corp. reported its December quarter results. Revenues in the quarter were $5.2 million in-line with our estimate and compared to $4.9 million in the previous and year ago quarters. Adjusted EBITDA in the December quarter was a loss of $6 million and in line with our estimate and unchanged from the previous and year ago quarters.






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      Digital Turbine, Inc.. (APPS: Buy, $4.15 PT)

      February 6, 2019– Yesterday, after the close of trading, Digital Turbine reported its December quarter results. Revenues in the quarter were $30 million compared to our estimate of $29 million and compared to $24 million in the previous quarter and $23 million in the year ago quarter. Gross margins continued their upward momentum for the third quarter in a row and attained a non-GAAP gross margin of 37.4% up from 34.6% in the previous quarter. The company reported adjusted EBITDA of $3.8 million compared to our estimate of $2 million and better than the $1.6 million in the previous quarter and $0.2 million in the year ago quarter.






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      Energous Corp. (WATT: Buy, $20 PT)

      February 27, 2019– Today, prior to the opening of trading, Energous Corp. reported its December quarter results. The company generated $56,000 in research and development offset payments in the quarter, significantly lower than our estimate of $1.4 million and down from the previous quarter’s $23,000. Adjusted EBITDA in the quarter was a loss of $8 million which was greater than our estimate of a loss of $7 million but down from the previous quarter’s loss of $9 million and unchanged from the year ago quarter.






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      I.D. Systems, Inc. (IDSY: Buy, $8.80 PT)

      March 11, 2019– On Wednesday March 6 after the market close, IDSY reported a 4Q:18 Non-GAAP per share loss of $0.03 and revenue of $11.5 million, which compared to our estimates for a penny loss on $11.3 million revenue. Although we net about $1.3 million ($0.07 per share) of non-recurring costs from earnings, R&D was still above our estimate.






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      InterDigital, Inc. (IDCC: Buy, $96 PT)

      February 22, 2019– IDCC reported 4Q:18 Non-GAAP EPS of $0.24 on revenue of $75.3 million yesterday, beating our estimate for $0.08 on $71.8 million. Revenue guidance was for $70-$76 million. Cost management and operating leverage are a central and possibly underappreciated element in the IDCC story. After acquiring Technicolor’s IP assets in 3Q:18, management commented that it returned normalized expenses to 2017 levels as of 1Q:19.






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      Inseego Corp. (INSG: Buy, $6 PT)

      March 20, 2019– Verizon (NYSE: VZ – NR – $57.50) accounted for about 50%
      of total revenue in 2017. Although INSG’s line of Verizon hotspots, particularly the first 5G home gateway, offer room for additional growth from current levels, INSG tallied a number of wins with other carriers including Tier 1 in the U.S. Combined with other revenue opportunities, we expect VZ concentration will become less severe in the coming years.

      Kopin Corporation (KOPN: Buy, $2.00 PT)

      March 12, 2019–  KOPN reported a 4Q:18 Non-GAAP loss of $0.09 on revenue of $7.7 million, which compared to our estimates for a $0.09 loss on $8.6 million of revenue. Industrial and military revenue were lighter than we expected, although consumer slightly beat our estimate.






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      Mitek Systems, Inc. (MITK: Buy, $20 PT)

      January 30, 2019– Yesterday, after the close of trading, Mitek Systems reported its December quarter results. Revenues in the quarter were $17.7 million compared to our estimate of $17.0 million and compared to $21.0 million in the previous quarter and $12.1 million in the year ago quarter. Revenues in the quarter, which grew 47% year over year, were driven by strength in both mobile check deposit and mobile ID verification segments.






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      Model N Inc. (MODN: Buy, $23 PT)

      February 19, 2019– Model N SaaS based software platform offers solutions that solve inefficiencies within the sales process. The software is used to automate the revenue life cycle and align it with the enterprise’s strategic, end-to-end process which drives optimal pricing and greater value from contracts. The platform also optimizes channel incentives and garners accurate
      financial reporting and regulatory compliance.






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      Nano Dimension Ltd. (NNDM: Buy, $1.80 PT)

      February 4, 2019– On Friday Nano Dimension announced that it raised much needed cash through a public offering. The company raised at least $12 million and could raise as much as $36.6 million with the overallotment, the warrants, and rights that are attached to the shares are exercised.






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      OneSpan (OSPN: Buy, $23 PT)

      February 20, 2019– OSPN reported 4Q:18 Non-GAAP EPS of $0.17 and revenue of $64.8 million, which compared to our estimates for $0.09 on $58.5 million of revenue. In addition to revenue outperformance, operating expenses were about $700,000 lower than we modeled.






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      Progress Software Corp. (PRGS: Buy, $46 PT)

      January 18, 2019– PRGS reported a 4Q:F19 non-GAAP EPS beat of $0.04 on $1.8 million higher revenue as OpenEdge’s lumpiness swung in a favorable direction. Although we project OpenEdge segment revenue to be down about $10 million in F2019, $6 million is due to forex and
      most of the rest revenue timing.






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      Ribbon Communications (RBBN: Buy, $10 PT)

      February 21, 2019– RBBN beat our adjusted EBITDA estimates by $2.1 million on a lower level of recurring expenses. Non-GAAP revenue of $173.4 million came in below our $175 million estimate. Cost reductions following the 2016 merger of Sonus and Genband continue to drive profits higher, with 2018 adjusted EBITDA of $84 million improved from $24.4 million in 2017.






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      Resonant, Inc. (RESN: Buy, $6.30 PT)

      March 15, 2019– Yesterday, after the close of trading, Resonant reported December quarter results. Revenue in the quarter were $0.1 million compared to our estimate of $0.5 million and compared to $0.1 million in the previous quarter and $0.2 and year ago quarter. Operating expenses were $7 million in-line with our estimate and essentially unchanged from the previous quarter and up from $6 million in the year ago quarter. Adjusted EBITDA of a loss of $5 million was in line with our estimate and unchanged from the previous quarter but up from a loss of $3 million in the year ago quarter.






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      ShotSpotter Inc. (SSTI: Neutral, $44 PT)

      February 20, 2019–  SSTI reported 4Q:18 EPS of $0.03 on revenue of $9.7 million, which compared to our estimates for a breakeven quarter on $9.5 million revenue. The company also added 24 net miles to its gunshot detection network, beating our estimate of 21.






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      Super League Gaming (SLG: BUY, $15 PT)

      March 11, 2019–  Super League Gaming’s focus on amateur is unique in e-sports. The e-sports professional space has been developed and players have had the ability to play other players individually in online game rooms. Super League Gaming is the first mover in the amateur e-sports arena to bring players together to compete as part of a team that is based on geography or association.






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      Xperi Corporation (XPER: Buy, $36 PT)

      February 21, 2019– XPER reported 4Q:18 billings of $141.8 million and billings-based Non-GAAP EPS of $1.19, compared to our estimates for $140.2 million and $1.18, respectively. Guidance was for $140- $145 million of billings. We raised our 2019 billings estimate to $396.8 million from $392.7 million given guidance of $395 to $415 million. We also raised 2019 Non-GAAP EPS estimates to $2.40 from $1.53 on the higher billings estimate and lower operating expense projections.






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