The Bigtincan Holdings Ltd (ASX: BTH) share price is storming higher on Tuesday morning.
In early trade, the sales enablement platform provider's shares are up 4% to $1.17.
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Why is the Bigtincan share price storming higher?
The catalyst for the rise in the Bigtincan share price on Tuesday has been the release of a positive contract update this morning.
According to the release, the company has signed an extension agreement with existing US based telco giant T-Mobile. The new agreement extends its contract by $6.3 million in total contract value over a two-year period. This means the T-Mobile total contract value now stands at $18.4 million since its initial deployment.
That initial deployment occurred in 2017 when Bigtincan won a competitive tender to implement the Bigtincan Content Hub across 5,500 retail stores on up to 23,000 mobile devices. It has now been extended to include the use of Bigtincan Learning Hub across customer facing sales users.
Management notes that this new agreement reflects its "land and expand" business model. This model is designed to enable the company to achieve long term growth through contracts that are underpinned by strong unit economics, created through investment in the core technology platform, coupled with smart tech focused M&A.
It highlights that the strong unit economics are underpinned by the cost of acquisition being lower than the high customer lifetime value of a contract like today's agreement. This is contributing to growth of its Lifetime Value (LTV) metric and a strong LTV/CAC [customer acquisition cost] metric.
At the end of December 2020, Bigtincan achieved an LTV of $363 million. This was up 44% from the same period a year earlier. In addition to this, it has achieved an LTV/CAC of between 3.5 and 4.5 since the first half of FY 2018.
Following today's gain, the Bigtincan share price is now up by an impressive 37% over the last 12 months.
