How Gatekeeper Systems Is Set To Profit From The Lucrative IoT Market
The Internet of Things, or IoT, is an industry that is seeing very rapid growth. Machine-to-machine communication is enabling inanimate objects to become “smart”. This technology has wide-reaching implications as connected devices improve efficiency and accuracy, enable data collection and reduce or eliminate the need for people to perform mundane tasks. Naturally, many small cap companies are out there trying to capitalize on the IoT trend.
Gatekeeper Systems (CA:GSI – $0.15 & US:GKPRF – $0.13 & GER:1GK – €0.09) is one such company in that sector that can actually execute. Thanks to Gatekeeper’s recent history of growth, multiple lucrative contracts, and technological expertise, GSI has transformed itself from a digital video systems company to a fast growing Artificial Intelligence (AI) & Video Analytics provider. Enabling connected devices within an IoT infrastructure is a natural extension to the Company’s existing service offerings as it seeks out opportunities to make the world safer for public transit users and school children.
Gatekeeper Is Making Cities Smart for an Efficient and Safe World
Last week, Gatekeeper announced the introduction of its Platform-as-a-Service business model, designed to enable intelligent transportation systems for Smart City initiatives. GSI has proven out a profitable business model while securing contracts for its wireless live-streaming video surveillance, video analytics, driver monitoring, and incident management solutions. Its PaaS platform will leverage the Company’s existing business by using the intelligent video devices that are already being installed for its transit authority clients. The devices are GPS-enabled and wirelessly connected, allowing for public transit vehicles to be interconnected into the ecosystem of a Smart City.
In addition to efficiency and data tracking, safety is a big selling point for Gatekeeper’s services. The Company introduced its Tactical Ready Kit this past week, another example of its Smart City system solutions. The kit is a portable unit which will allow law enforcement personnel to easily obtain real-time access to internal video and audio from a stationary or moving school bus in close proximity. This will help to determine appropriate courses of action during crisis situations. A Florida school district with a fleet of approximately 70 buses will be the first customer to deploy it. The innovative solution includes digital video recorders, interior cameras and video analytics software along with the kit. It’s easy to see how quickly revenues will be able to add up for Gatekeeper, as buses within this fleet will be outfitted with multiple pieces of equipment and contain the PaaS platform.
Video surveillance and data gathering are seen as two controversial topics in this new connected world we live in. Not everyone is on board with one or either of these developments as privacy is always a concern. However, we think that Gatekeeper’s management has positioned itself brilliantly in today’s world as a company focused on safety. CEO Doug Dyment made these very concise comments about the Florida bus deal, “School bus safety and passenger protection is our mission. This solution improves safety for both the schoolchildren as well as law enforcement personnel.”
Gatekeeper’s business is focused on monitoring very public and possibly vulnerable areas such as transit systems and school buses. We think that the surveillance and data gathering the Company makes possible through its services will be seen as substantially positive motivations for doing business in this field. This will reflect well on Gatekeeper’s brand and make it possible for the Company to aggressively grow.
Conclusion: Gatekeeper is a Rare Undervalued Tech Gem on the TSX Venture
At a stock price of $0.15, GSI has only a $13 million market cap on the TSX Venture Exchange. This level of valuation in the technology space is usually reserved for a highly speculative company with little to no revenue and a weak balance sheet. Gatekeeper has worked hard to gain a solid financial footing and achieve significant revenue growth over the past several quarters.
The Company’s trailing four quarters of revenue is $15.2 million, leading to a revenue multiple of less than 1x. It has produced positive net income in two of the last three quarters; narrowly missing its third positive quarter in a row in a seasonally weak Q1. It has a strong balance sheet with over $6 million in working capital. It has not needed to dilute as its share count has remained steady between 87 million and 88 million throughout fiscal 2018 and 2019. We think that GSI will have a very strong fiscal 2020 based on the trajectory of the last three quarters, contract backlog and its new Smart City initiatives. Smallcaps Recommendation: BUY.
|Smallcaps.us Advice: Buy||Price Target: $0.65||Latest Company Report (pdf)|
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