YB new stock pitches (Mon, Aug 26)

Zenvia (ZENV) is a Brazilian SaaS and CPaaS company trading at $1.53 with a $80M market cap that represents an attractive special situation where good assets are encumbered by a bad balance sheet from $300M in acquisitions completed after their 2021 IPO. The company announced in January they will divest their CPaaS segment (similar to Twilio) which could generate approximately $50M in net proceeds based on estimated 7x EBITDA multiple (using Sinch's acquisition of Brazilian CPaaS company Wavy at 12.5x EBITDA as a comparable), leaving a remainco SaaS business with ~$75M revenue trading at just 1x EV/revenue. The key catalyst is management's expectation that their Customer Cloud (ZCC) platform will grow 25-30% annually at 68-70% EBITDA margins, though Q1 growth of only 15% raised concerns about achieving these targets due to customer conversion lumpiness and challenging Brazilian macro conditions with 15% interest rates. The company currently trades at extremely low multiples of 0.7x EV/sales and 6x EBITDA due to $51M in acquisition earnouts and Brazil exposure, but faces risks including the need to renegotiate earnouts, lumpy CPaaS margins from telco pricing increases, and execution challenges in a weak Brazilian economy. With CEO ownership at 40% and Twilio owning 8% as a potential CPaaS buyer, the bull case targets $3.00 per share (100% upside) assuming 3x ARR multiple on Customer Cloud and 1x revenue on legacy SaaS assets once the divestiture clarifies the higher-quality remainco business structure.

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Innoviz Technologies (INVZ) reported a strong Q4 with revenue growth from NREs and test shipments, increased NRE guidance by $10M (representing future cash flow), and announced a $75M ATM offering to strengthen its balance sheet. The company is best positioned in the automotive lidar space with several advantages: integration into Mobileye's Drive L4 platform, being at the final stage of a L4 trucking agreement, and status as the only lidar integrated into an L3 program with start of production in 2026/2027. Innoviz is also considered the frontrunner for GM's program, which would make them the L3 provider for two of the top five OEMs. The company has improved its financial position by reducing cash burn to approximately $60M annually and has approximately $30M in NRE cash flow booked for 2026. Combined with the ATM offering, Innoviz has enough liquidity to reach 2027, despite the significant dilution to current shareholders. This financial strengthening addresses previous concerns about the company's need to win new NREs or raise debt to ensure long-term success.

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ProPetro Holding Corp. (PUMP) is a pureplay Permian basin operator with a fleet of approximately 15 rigs, the majority being e-frac or Tier IV, currently running below capacity due to the multi-year downtrend in Permian oil production while gassy basins see market uplift. The company presents as an attractive acquisition target with minimal to no debt, reducing risk despite its small scale. Near-term risks include macro weakness, lower activity levels, and their decision to pause share buybacks to self-fund a new mobile power generation venture, which may have contributed to recent stock weakness. Despite these challenges, the current price levels represent a significant opportunity for investors.

Read the full article here. Read time: 1 min