(SPRT): Foundation of Fiscal Discipline Underpins Turnaround

Edward Kim  |

We've been watching the application software sector closely, particularly on the microcap end, since Snap (NYSE: SNAP) went public three months ago. We questioned whether or not that company's lofty valuation was justified. While the jury's still out on Snap, we've been closely following (NASDAQ: SPRT), which we cited in that article. The company reported Q1 results earlier this month, and we're encouraged to see the continued fiscal discipline from CEO Rick Bloom that will be the key foundation for this company going forward.

The company provides cloud-based software and services to deliver technical support to software, electronics, communications, retail, Internet of Things (IoT) and other connected technology industries. Customers include Comcast (NASDAQ: CMCSA), Staples (NASDAQ: SPLS) and Upclick.'s services include:

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  • Onboarding Services
    • Install and set-up
    • Network services setup
  • Problem Resolution
    • Diagnosis and repair
    • Warranty triage
  • Internet-of-Things Support
    • Home automation
    • Home security

Mr. Bloom stressed that "continued to focus on reducing operating costs during the first quarter" and the company's improved financial results reflect some of the significant cost savings initiatives recently put in place. These initiatives include:

  • Changing certain vendors
  • More efficient call center operations
  • Selective headcount reductions
  • Relocating corporate offices

The company reduced its net loss from previous quarters, and the stock has shown modest signs of life recently, up 14% in the past 3 months. Though the stock still trades rather thinly, we have seen a modest uptick in interest also, with average daily volume increasing from 51,000 shares in April to 73,000 in May. It may be early to declare that the turnaround is complete, but we're encouraged by what we've seen, and we're strong believers in fiscal discipline as a necessary underpinning for any sustainable growth.

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