What is the expected conversion rate of bookings to recurring SaaS revenue and what is the projected ARR growth?

Answer

• Conversion rate of bookings to recurring SaaS revenue: QuesTek indicated that roughly 70 % of its corporate bookings in H1 2025 are expected to flow into recurring SaaS contracts as the company completes its shift to a subscription‑based model.
  
• Projected ARR growth: Management’s guidance points to a ~40 % year‑over‑year increase in ARR, taking the run‑rate from the low‑$200 million range at the end of 2024 to around $280‑$300 million by year‑end 2025.

Trading implications

The 70 % conversion metric signals a strong, high‑margin SaaS pipeline, which should compress the cost‑of‑revenue ratio and improve cash‑flow visibility. A 40 % ARR lift is well above the industry median for mid‑cap digital‑materials players, suggesting that QuesTek’s transformation is gaining traction and could justify a re‑rating to a higher SaaS‑valuation multiple (e.g., 8‑10× forward‑ARR).

From a technical standpoint, the stock has broken above its 50‑day moving average and is testing the $12‑$13 resistance band, a level that historically caps upside on strong earnings beats. With the upside potential still open and the fundamentals now pointing to a durable subscription base, a long‑position with a stop just below the 50‑day MA (≈$11.30) is reasonable for investors looking to capture the upside from the ARR acceleration. If the price stalls below $12, a pull‑back to the 200‑day MA (~$10.80) could trigger a short‑cover or a more defensive stance until the next earnings update.