The Whispir Ltd (ASX:WSP) share price is now 35% off its 52-week high. Time to buy?

Despite the Whispir Ltd (ASX:WSP) share price dropping 35% in recent months, there are still plenty of reasons to recommend the company.

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Since peaking at a 52-week intraday high of $5.24 back in late July, shares in software market darling Whispir Ltd (ASX:WSP) have tumbled 35% lower. At the time of writing, the Whisper share price is trading up 1.47% at $3.45.

Let's take a look at the factors driving the decline and try to assess whether the company is still a good investment.

What does Whispir do?

Whispir operates a software as a service (SaaS) business model. It develops a centralised platform where its corporate customers can create high quality, customisable templates for email, web and social media communications, as well as manage communications workflows and drive insightful reporting.

Its share price really took off during the early stage of the COVID-19 crisis. Whispir achieved record growth in customer numbers throughout the second half of FY20 and managed to materially outperform most of its revenue and earnings targets.

Use of its platform accelerated during lockdowns, as companies sought greater control over business-critical communications workflows. Whispir even developed a number of standardised templates to assist its clients meet their communications obligations with staff and customers.

Why has the share price declined?

Whispir reported strong results across the board in FY20. Revenues were up almost 26% year-on-year to $39.1 million, beating its prospectus forecast of $37.8 million. Prudent cost management also saw operating expenses come in lower than forecast at $31.7 million. And the company ended the year with a little over $15 million in cash sitting on its balance sheet.

But, despite these numbers, the Whispir share price has trended lower since the results announcement.

Even solid first quarter FY21 results couldn't do much to stop the decline. Whispir announced that during the three months' ended September 30, 2020, it had added a record 35 new customers and brought in $10.5 million in cash receipts. But the company's share price still dropped almost 10% on the day of the release.

What do our Fools say?

Whispir still remains a favourite of our analysts here at Motley who have added it to their list of Extreme Opportunities not once, but twice – most recently back in July. They believe that, while COVID-19 did accelerate the company's growth, there are still more opportunities on the horizon for this young company.

Our Foolish analysts were particularly impressed by Whispir's high revenue retention rates, as well as the company's ability to respond in times of crisis. By quickly developing COVID-19 communications templates, Whispir increased the customer use cases on its platform. As an example of the company's potential, the Victoria State government's Department of Health and Human Services has been using the platform to manage its COVID-19 contact tracing communications.

Despite the recent pullback in its share price, Whispir's versatile, scalable business model means our analysts recommend it as a buy.

Rhys Brock owns shares of Whispir Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Whispir Ltd. The Motley Fool Australia has recommended Whispir Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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