OneSoft Solutions ($OSS.v)

I’vs had some shares of OneSoft for a few years. I thought it was a good idea to put down some of my thoughts on the company to instigate conversation. This is not a typical investment for me as this was pre-profit when I purchased shares and always trades at a expensive TTM revenue multiple.

I think it makes sense to stop and appreciate something this company does. The company probably has the best MD&A of any microcap that I have come across. Each quarter they go into very deep detail on how the quarter went and what they are working on.

Since purchasing shares, I’ve been able to witness the company hit a few major milestones and pivot a few times.

  • reaching commercialization of their product
  • partnering with a large US pipeline company to adapt their internal integrity management to CIM
  • continuing to expand the functionality of CIM with additional modules that are high value for customers
  • raise capital to fund growth initiatives at opportune times
  • pivot their sales strategy from a fixed fee per mile of pipe to a consumption based model that is easier for customers doing project based work
  • get to ebitda breakeven (tbd if it is for the full year)



As you can see, not cheap. 10x forward sales is super expensive.

Business Background (pasted from AIF)

OneSoft Solutions Inc. is a provider of software solutions for select markets, all of which are built using Microsoft’s Cloud technologies. Its mission is to acquire, manage and build next-generation software businesses that will provide specialized, mission-critical cloud-based software solutions to address customer needs. OneSoft develops software technology and products that have the capability to transition legacy, on premise licensed software applications to  operate on the Microsoft Cloud using Microsoft Business Intelligence software (“Microsoft BI”) and Microsoft Azure Data Sciences functionality including Machine Learning and Predictive Analytics. OneSoft’s business strategy is to seek opportunities to convert legacy business software applications that are historically cumbersome to deploy and costly to operate, to a more cost-efficient subscription-based business model utilizing the Microsoft Cloud platform and services, with accessibility through any internet capable device.

Their Product (pasted from AIF)

Cognitive Integrity Management (“CIM”) is a software-as-a-service (“SaaS”) application that uses the Microsoft Azure Cloud Platform and services including machine learning (“ML”), predictive analytics, business intelligence reporting and other data science components to assist pipeline companies to prevent pipeline failures. Fees charged to access and use the software are variable and dependent on key metrics such as the miles of pipeline data analyzed, number and type of pipeline assessments ingested, Azure usage costs and the functionality that clients choose to use.
CIM features revolutionary Pattern Detection and Interacting Threats algorithms to detect and report on threats to the pipeline’s integrity. CIM was designed to ingest inline inspection (“ILI”) pipeline data using a simple “drag and drop” routine after which the data is normalized, anomalies are aligned to prior ILI data sets, and predictive analytics calculates anomaly growth rates, resulting in detection of threats to pipelines. CIM provides advanced business intelligence, intuitive graphical presentations, dashboard reporting and natural data query language capability that enables operators to manage their pipeline infrastructure with more efficiency than legacy systems and processes that do not utilize cloud computing.


As you know, pipeline failures are costly and bring a lot of bad press.

They specifically add value to the customer by:

  • reducing the staffing required to analyze pipeline cell wall anomalies, which is usually done by a team of engineers
  • increase the predictability of potential cell wall degradation
  • reduce unnecessary costs from digging up pipe that doesn’t need to be dug up
  • reduces the time to analyze the ILI data (from weeks/months to hours/days)
  • increase the effectiveness of a company’s repair work
  • most important from a regulatory standpoint; help companies identify high risk anomalies that will lead to pipeline failure
  • can give smaller companies a cost effective way to analyze ILI data if they don’t have the internal resources to hire engineers to look at the data

There is about 600,000 miles of pipe that gets “pigged” and has ILI data. This is the initial target for OneSoft. There are another 2.7 mil miles of pipe that doesn’t get “pigged”. They are currently adapting their platform to be able to handle non-pigged pipe in the future.

The largest hurdle so far is getting customers to buy into going to software performing the work of in house engineers. They industry is not known for being innovative with predicting failures.

Management has estimated that ARR (annual recurring revenue) will double the year. That means that we should see 5.4 mil ARR in 2020.

The company went through a Microsoft Accelerator program in 2016 to help bring the technology to market quickly. It sounds like they are a few years ahead of any potential competitors and management has made it clear that they will continue ton invest in the platform to stay ahead of any competitors.

Future Opportunities

The company has recently set up an internal innovations lab. The lab will be focused on growing their TAM and increase (or at least maintain) the head start they have on competitors. I think this speaks to their focus on growing the business, but doing it in an intelligent manner. It doesn’t seem like unabashed top line growth for the sake of growth. As the company has grown, some resources that were designed for development were likely borrowed to help operations onboard new clients. The innovation lab should minimize or eliminate that form happening.

Current opportunities identified by management:

  • working with ILI tool vendors to automate some manual tasks
  • Collaborate with parties to see if there are specialized engineering knowledge to integrate into CIM
  • Explore integration of additional data sets
  • Investigate new industries (water and sewer have been identified)


The company has been doing the work from home thing for years, so there are no real risks to operations. There is the obvious economic risk from covid, but they are somewhat insulated being focused initially on mid-stream pipe. The biggest impact so far has probably been a slowdown in sales and perspective customer trials.

There are some potential positives as the work from home movement continues and the need for a cloud based solution like OneSoft’s CIM is desired.

Risks (I’ll let you judge the likelihood of each)

  • the regulation push from PHIMSA could be delayed or eliminated
  • sales may take way longer than anticipated and share price could see a multiple contraction
  • new competitor could emerge
  • they could continue to develop new solutions and be unable to market them

Tangible Milestones

I like to think in terms of tangible milestones for a company like OSS. Given that they are focused on growing the business, I think traditional profitability focused metrics do not apply in the near term. Here are some milestones I’ve identified over the next 9-36 months that I think are possible.

  • continue to see top line growth 50%+ yoy
  • obtain revenue from non-piggable pipe
  • enter new vertical(s)
  • derive revenue from their Canadian partnership with Worley Parsons
  • expand internationally by partnering with someone


I think of an investment in OneSoft as an asymmetrical risk/reward. There are many risks with a company this size that is pre-profit. Having said that, this company: has a large current and future TAM, is shareholder accessible and customer focused.

I believe I can manage the risks with an extended timeframe (2-3 years) and position sizing.

What do you think of OneSoft? What are you favorite SaaS companies?



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