ShiftPixy (PIXY) Exemplifies Innovation in a Pandemic
BREAKING NEWS: ShiftPixy Labs may be a new vertical
Good day everyone,
We are initiating coverage of ShiftPixy, Inc. (NASDAQ: PIXY), a company delivering a next-gen mobile engagement technology to help businesses with shift-based employees in the gig economy workforce.
Current price $5.06 per share
Outstanding (est.) 16.6 million shares
Float (est.) 3.49 million shares
Insider holdings 73.2%
PIXY is the company that supplies gig workers to companies, primarily in the service industry, that need short term help. The process is accomplished through the ShiftPixy platform where employers and workers are connected through a mobile app. Employers post their shift needs and workers post their availability.
ShiftPixy can benefit the unemployed, under employed, or fully employed people that just want more work. ShiftPixy could be, to the food service industry, what UBER was to transportation 10 years ago.
BREAKING NEWS Yesterday 07/29/20:
PIXY just announced the launch of ShiftPixy Labs – a new suite of marketing and support services for quick service restaurant operators (QSRs) seeing increased opportunities in the gig economy due to coronavirus restrictions and lockdowns.
Through its unique gig engagement platform, ShiftPixy empowers restaurant operators to take full advantage of their human capital with powerful functionality to handle payroll, compliance, and native delivery. The Company expects ShiftPixy Labs to provide additional layers of services and engagement, from business startup clear through to customer meal delivery.
This new initiative is also designed to help restaurants re-purpose staff for deliveries during COVID-19.
According to PIXY CEO Scott Absher, “ShiftPixy Labs is the next stage in our evolution. This is a bold new project that’s aiming to change the way restaurants are built from the ground up.”
Some of the company’s larger customers are Denny’s, Taco Bell, Subway, Papa Johns Del Taco, McDonalds, Dominos, and Wing Stop.
PIXY has a FYE of August 31 so their Q3 ended May 31 and the results were posted two weeks ago:
Revenues for Q3 were down as many of their customer’s businesses were simply closed due to the pandemic.
We want to consider the rapid “pre covid” growth in PIXY revenues:
FYE 2019 $53M
FYE 2018 $34M
FYE 2017 $20M
FYE 2016 $8M
The absence of revenues apparently gave PIXY time to make some changes that may benefit the company in a post business closure environment.
PIXY improved their balance sheet with a cash position of $10.8 million and no long-term debt as of May 31, 2020.
They fully converted all convertible debt outstanding.
Despite COVID-19 related impacts on their Southern California based restaurant customers, gross billings grew 21%.
Despite the impact of COVID-19, their customer count continues to increase with approximately 81 clients representing over 300 customer locations and 2,700 billed employees, an increase of 106% over Q3 2019.
PIXY has grown to 3,200 billable employees at the end of June, but they are staffed to manage up to 50,000 active worksite employees with their current corporate overhead.
We think that the tiny float, innovation and flexibility in the business model, high insider position, a quality customer base, and being a frontrunner in a new industry may be factors that not only grow the company in a less hostile food service environment, but also could support a higher share price.
The current market cap for PIXY is at $81M, or 1.50X the FYE 2019 revenues. High growth companies with disruptive business models often exhibit a much higher price/sales ratio.
If we look at the chart below (click the link), we can see spikes in the PIXY share price that seem to occur in tandem with press releases from the company. The April spike occurred as the company announced it would assist certain customers with leveraging PPP funding provided by the government in support of their employees.
The May spike in the share price came on the heels of a deal inked with 11 Del Taco locations.
We cannot help but wonder if the current press about ShiftPixy Labs, a potential new vertical for the company, could have the same effect on the share price in the near term.
https://stockcharts.com/h-sc/ui?s=PIXY
We will be back with updates soon,
The Traders News Group
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