Hi there,
DND is one we have on our watchlist. We like the company's potential to be a disruptive force in the legal industry much like fellow Bull List stocks DCBO and REAL have been disruptive forces in their own areas. As a company that just IPO'ed, we will likely wait to see how it performs over the first few quarters as a publicly listed company before truly considering it for the Bull List.
That being said, we like what we have seen thus far. The company is the industry leader (Canada and the UK) and is well diversified with over 25K clients and no client accounting for more than 2% of revenue. It also counts the top 20 largest law firms in Canada as clients. It has also proven to have a 'sticky' platform as it has a very low customer churn rate (~2%). In other words, when DND onboards a client 98% of them stick with the platform.
It aims to growth organically through capturing market share and through acquisitions. In 2020, it has already made five acquisitions. It is not yet ready to enter the U.S., but intends to target Australia as one of its next geographical expansions. In terms of execution, the company has only had 2 quarterly reports since it went public. Both times it missed on earnings, but beat on revenue. Analysts expect the company to grow revenue by a robust ~30% annually (not including future acquisitions) over the next few years. Given the high growth mode, we aren't so concerned about the earnings misses - it is all about revenue at this point. Granted, we will eventually see improvement in that area. At this point however, it is secondary to revenue growth.
DND still has very much to prove. Trading at 7.5 times forward sales and 10 times book value, the company isn't cheap - but it also isn't all that expensive when compare to other SaaS companies. We think this company has plenty of potential and the runway for growth and industry M&A is quite large.
Mat
(Of note, myself and Dan are both long DND )