Total Brain Limited: FY20 Sales up 49%, DCF Is $1.29/Share

Total Brain (ASX:TTB) is the developer of a neuroscience-based mental health & fitness platform powered by the largest standardized neuroscientific database in the world formed over almost two decades and with $50m of R&D funding. Total Brain reported a 49% lift in FY20 revenue to $3.9m driven by growth in corporate subscriptions and subscriptions generated by affinity partnerships. The company signed more than 20 contracts and partnerships representing more than $2.1m in annual recurring revenue in the year. ARR now stands at around $4.5m. Cost containment was a significant feature in the FY20 result, with costs of goods sold, employment costs and operating costs all coming in lower than our forecasts. We have incorporated the FY20 results into our model and rolled the model for the new financial year. Our base case valuation is adjusted to $1.29/share (previously $1.27/share) and on a fully diluted basis for all options on issue is $1.22/share. In our view, continued momentum with new contracts should underpin Total Brain’s share price performance.