Verb Technology Company Inc (NASDAQ: VERB) has struggled for direction after a long period of consolidation at all-time lows. A wave of class action lawsuits has continued to take a toll on the stock’s sentiments. However, a solid second-quarter earnings report could reinvigorate investor confidence on reaffirming underlying growth.
Verb Technology Price Analysis
Robust revenue growth in the recent quarter signals a company doing exceedingly well behind the scenes. After shedding a substantial amount of market share over the past few months, a solid earnings report should provide a ray of hope with regards to the company’s long-term prospects.
Trading volume has already started to edge higher signalling renewed investor interest in the stock after a period of subdued market activity. Considering recent months underperformance, Verb Technology will have to rise and take out the $3 a share resistance level to affirm its bounce back credentials.
Above the $3 a share level, the stock would be well positioned to make a run for higher highs as a bounce-back play. Conversely, below the critical resistance level, short-sellers remain in control given the underlying long-term bear trend.
About Verb Technology
Verb Technology bills itself as a cloud-based business software Company. The company’s flagship product is TaggCRM, a customer relationship, a management application that allows people to create distribute and post interactive videos. The company also offers TaggMED an app that allows medical practitioners to maintain interactive and efficient communications with patients.
Verb Technology underperformance has everything to do with a wave of class-action lawsuits that has continued to take a toll on the stock. The company is facing allegations that it provided misleading information about the scope of its agreement with Oracle.
Investors had reacted to claims of a strategic partnership between the two for the development and marketing of the company’s products, by pushing the stock up the charts by buying the stock. As the market digested the nature of the alleged strategic partnership, the stock rallied. However, as the truth of the collaboration with Oracle began to emerge, Verb Technology found itself on the receiving end shedding more than 50% in market value.
While the wave of class action lawsuit has taken a toll on the stock, an earnings report underscoring robust growth on the core business should help strengthen the stock’s market sentiments. A 20% increase in second-quarter revenue should help move attention away from the Oracle debacle.
Sales Growth Boost
For the three months ended June 30, 2018, the company generated $3.7 million in revenues, compared to $3.1 million reported a year ago. SAAS revenue, which accounts for the company’s core business was up 37% to $1.5 million, affirming growth in the core business. Revenue for the first six months of the year was up $7.7 million.
Improving gross margins is another development that should continue to bolster the company’s market sentiments. Gross profit in the second quarter totaled $1.7 million, representing a 5% increase from a year ago. Gross profit for the first six months of the year was also up by 19% to $3.4 million.
Impressive second-quarter earnings results coincide with a wave of strategic partnerships that the company has inked for the use of its products. In July the company inked a deal that will see health and wellness Company PrimeMyBody unveil a mobile sales application and digital platform based on VERB technology.
“We spent the past 8-9 months analyzing all of the apps in the industry. After all, of our research, we chose VERB because they are the leading provider. VERB has a technology that no one out there has,” stated Paul Rogers, PrimeMyBody CEO. “This will be an important tool to help all of our field reps grow their businesses around the world.”
Revital U International LLC is another company that has launched a mobile app that includes a VERB’s interactive tagg video capabilities. The integration will allow users to record videos and embed clickable tags that promote engagement levels.
The tide is slowly turning in favor of Verb Technology after coming under immense pressure in recent months. While the stock has taken a significant hit over the Oracle debacle, the core business continues to grow at an impressive rate.
Robust revenue growth is a development that affirms the company’s growth metrics. That said the stock is likely to bounce back on investors taking note of the fact that it is not doing badly as initially feared. In looking at the current oversold condition, VERB is due for a strong bounce. The risk/reward setup looks appealing as the worst looks to be over for the company.
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Disclosure: We have no position in VERB and have not been compensated for this article. We may or may not initiate a LONG position within 72 hours of publication.