The global telecommunications market is evolving, especially with the entry of emerging technologies. Further, the rise of the over-the-top (OTT) entities and market saturation are threatening revenues. Despite all that, Pareteum Corp (NASDAQ:TEUM) is experiencing increased growth.
The general technology sector is transforming quickly. Emerging technologies such as the Internet of Things, Big Data Analytics, AI, M2M, and even Cloud Computing lead the transformation. However, this is not all rosy for the players in the sector, especially the telcos.
Pareteum Corp operating in the green
In all the clutter, Pareteum Corp is having one of the most successful experiences in the industry. As the latest earnings results attest, the firm is operating in the green.
In particular, all the key measures of financial performance are positive. For instance, the firm registered 129% year-over-year revenue growth which translates to $8 million.
Further, the firm reported a gross margin of 73%. Interestingly, the gross margin is in an upward trend, having grown consistently since the first quarter of 2018. However, the margin is a bit smaller considering Q3 2017 recorded 77%.
The positives do not stop there. Pareteum Corp’s cash balance is another aspect of the balance showing consistent growth. The only bump in Q3 2018 which saw the cash balance drop from $19.2 million to $18.9 million.
Undervalued stock
However, it seems the sea of green is not enough to convince investors regarding the company’s stock. In the last two months, the stock is sustaining a negative trend that threatens to go further down. Further, many of the critical indicators are in favor of a further slump in the share price.
For instance, the relative strength index (RSI) for the stock is not encouraging. This indicator is important in predicting the future direction of a stock. Notably, the RSI reading for the stock stands at 26.78. The significance of this is that the stock lacks enough momentum to pick up substantial value in the coming months.
Interestingly, the commodity channel index (CCI) agrees with the RSI. In essence, we use the CCI to gauge the strength or weakness of a particular stock. Typically, the values oscillate within the range of +100 and -100. Within the range, an investor can easily decide whether a stock has enough strength to pick up growth or not.
However, values outside the range indicate strong price actions like a bullish or bearish trend. In this case, the CCI reading stands at -106.96. As such, it is likely that the bears are more powerful than the bulls when it comes to Pareteum’s stock. Incidentally, the average true range (ATR) gives a similar conclusion.
Future performance
Despite the undervaluation of Pareteum’s stock, the future still looks positive. Particularly, the firm finalized important agreements which will contribute significantly to future growth.
This month, the firm entered five agreements that bring the 36-month contractual revenue backlog to a total of $24 million. All of the contracts run for three years each.
Further, the firm deployed services for previously-awarded contracts. As such, the company’s revenue recognition will continue to go up.
Vic Bozzo, chief executive officer of Pareteum, cited these developments while pronouncing great things in the firm’s horizon.
“Pareteum is rocketing toward the end of the year with new sales and newly-activated cloud platform solutions for our customers,” Bozzo said.
Further, the firm is integrating the emerging technologies into their “Global Software Defined Cloud platform.” As such, the firm’s customers will experience more utility. This will guarantee more customer retention as well as higher revenue projections.
As the firm’s Chairman, Hal Turner, reiterated, “When our customers succeed, we succeed.”