Boxlight Corp (NASDAQ: BOXL)
Background Boxlight Corp (“BOXL” or “the Company”) is an education technology company. The Company’s main product segments are interactive displays, whiteboards, projectors, and flat panels. The Company also offers a full suite of consulting services to clients including training, installation, and maintenance. Boxlight went public on the NASDAQ in November of 2017 and offered a secondary offering in June of 2020. The stock is currently trading for $0.5997 (as of 3/1/2023). My position is ~(47.23%) historically, however I remain committed to the BOXL value proposition, fundamentals and growth prospects.
Market Analysis Education technology or edtech is a hot sector of the technology market. Most analysts on Wall Street have been suggesting that the EdTech industry is ripe for disruption for several years now. Convergent trends such as machine learning and the failure of traditional education systems are forcing educators to change the ways in which they prepare the workforce of tomorrow. The World Bank believes that 60% of children fail to reach minimum levels of reading and arithmetic globally. Additionally, less than 3% of total global education expenditures is on digital learning. The combination of these factors presents an education technology market that is ripe for disruption.
Barclays equity research suggests that from now until 2030, new EdTech companies will be in the “Monetization & Scale” phase, and in 2030 they will shift into a “Disruption” phase. Incumbent players in the EdTech market are companies such as Chegg, Blackbaud, Oracle, Duolingo, and Workday. Much smaller scale companies such as Boxlight can out innovate the existing players. According to Forbes from 2022 to 2030 the market is projected to grow annually by 16.5%. Boxlight Corp is growing much more rapidly than the market: at a current pace of 28.24% revenue growth. Additionally, the Company has exceeded or met expected earnings the past 3 quarters in a row.
BOXL is currently not making a profit. However, the Company is still immature and has been using excess cash flow for growth. Since the IPO in 2017 BOXL has made 9 strategic acquisitions to transform the company into a full-service EdTech Platform. This suggests strong management conviction towards inorganic growth and new customer acquisition.
Market Cap: 44.52M
Revenue: 227M TTM
Revenue Growth: 28.24%
Current Ratio: 1.90
Forward PE: 13.23x
Net Debt: 34M
Levered FCF: 8.55M
Boxlight Corp revenue far exceeded its market cap. The failures of BOXL in the public market could be the result of a struggling stock market beating down on a small cap stock. The Company has strong ability to pay back their debt, evidenced by the current ratio. Despite earning net loss, the Company is FCF positive. Additionally, metrics such as Price/Book and Price/Sales suggest that BOXL may be severely undervalued. The management team also recently approved a $15M share repurchase program, which still has not been priced into the BOXL stock price.
Conclusion BOXL produces a high-quality suite of products in a rapidly growing and exciting new market. Analysts at Barclays, Credit Suisse and Goldman Sachs have all pointed toward the EdTech market as ripe for disruption in the next decade. As this market matures, the talented management team at Boxlight Corporation are poised to take market share from the incumbent players. Value investors willing to withstand short term losses should view BOXL as a promising investment with high upside potential.