Total Brain - Strong Growth in Q3 Cash Receipts

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 an 159% increase in Q3 FY20 cash receipts to $1.538m over the previous corresponding quarter in FY19 and a 52% increase in year to date (YTD) cash receipts in line with our forecasts. Monthly cash burn for Q3FY20 was $0.71m, a decline of 6% on the previous corresponding quarter in FY19 and a 30% decline on the cash burn recorded in Q2 FY20. The company noted that it had added seven new contracts in the March quarter, representing minimum annual recurring revenue of $1.9m. Total Brain expects cash receipt growth in the June quarter, in line with our expectations. Our base case valuation has been adjusted for our previous expectation that the March 31 $0.80/share options would convert. Our DCF valuation is $138m or $1.27/share. In our view, continued momentum with cash generation should underpin Total Brain’s share price performance.