Positive outlook for company remains intact
See the April post related to FY 2008 results for this Company. The fundamental outlook for this Company has not changed. The performance outlook for VIQ Solutions should be enhanced by the rollout of various national infrastructure stimulus plans announced by governments throughout Europe and North America.
Sales results weak for Q1; but as expected
Q1 results (which are typically the weakest seasonally) reflect the pre-stimulus challenges the company has faced, particularly in the United States. The previous US Administration and Congress had dramatically cut back funding for courts during the 2008 budgets. Election year uncertainty, combined with a deepening recession, made the situation worse. As a result, US contracts all but dried up for VIQ Solutions, reflected in Q1 2009 sales, which were $2.5 million, down from $2.8 million for the previous year Q1.
Margins improve for Q1
Management cut input expenses, and signed more software contracts, resulting in gross margins improving to 39% up from 37% for Q1 2008. Management expects gross margins to continue to improve going forward as the company continues to sign more software deals. EBITDA loss increased to $0.14 million for Q1 2009 versus $0.12 million loss for the previous year, although it should be considered virtually unchanged. Margin performance improved even as the company increased activity related to major signed contracts and ramped up sales execution during the quarter to take advantage of the more positive market conditions. Net loss for the quarter was virtually unchanged at $0.24 million loss, or $0.00 loss per share versus a $0.25 million loss for Q1, 2008, $0.00 loss per share.
Management drove positive cashflow; should stay that way
Despite a $0.3 million quarter-over-quarter decline in sales, the Company was able to report positive cashflow from operations of $0.06 million for Q1 2009 versus a cash outflow of $0.23 million for the same quarter 2008. The company has accelerated cash by reducing expenses, and by negotiating better terms on newer deals, resulting in DSO (Days Sales Outstanding)declining from nearly 70 days previously to approximately 40 days now. Investors should be pleased with management activities related to maximizing cashflow. Management has stated that it expects to remain cashflow positive for the foreseeable future.
Major contracts from Q1
During Q1, the company announced major contract signings in the UK (3.3 million Euro over 8 years) and in Australia (AUT$2.5 million over 3 years), which should begin to positively impact performance for Q2 2009 and onward. According to management, a majority of the revenue associated with new software-oriented contracts is recognized within the first year of multi-year contracts.
Subsequent events
Subsequent to Q1, the company has been active signing and deploying new contracts and contract extensions with undisclosed clients. Revenue associated with these transactions should positively impact performance for Q3 and Q4 2009 and beyond. The stimulus funds are starting to flow through the system from various governments worldwide including the United States. As a result, the company is beginning to see large opportunities for bid, which could positively impact performance as early as Q4, 2009.
Positive outlook enhanced by management's focus on cashflow
Notwithstanding the positive market outlook for the company, investors should be pleased that management has been able to generate positive operating cashflow for a weak sales quarter.
Showing posts with label Q1 2009 Results. Show all posts
Showing posts with label Q1 2009 Results. Show all posts
5/20/09
Route1 (ROI.V) Q1 Results Do Not Yet Reflect Milestone Order.
Actually, a small percentage of Qwest's (Q) 30,000 unit order have been reflected in Q1 results. We estimate that several hundred units were shipped ahead of the precursor DEFIMNET deployment, which was completed subsequent to quarter end. Even with a small number of shipments, revenue for the quarter jumped by 124% to $0.44 million from $0.19 million for the same period for the previous year.
Gross margins were reported at 73%, which Management believes to be a typical range going forward. This is good news for investors as the Qwest deployment begins to take off. Management expects that a vast majority of the Qwest's first order should be shipped by the end of the summer, with close to 10% of the order already shipped only three weeks subsequent to completion of the DEFIMNET roll-out.
An Interesting Market Development: The Swine Flu Pandemic has created more urgency among U.S. government agencies to get government employees set up to work from home. The TruOffice deployments on the DEFIMNET fits under several "emergency preparedness" initiatives that have become more prominent as the cases of Swine Flu have increased. Route1 should benefit from increased velocity of deployment, as well as from more potential demand from U.S. Government agencies thoughout the year.
Don't Forget Europe: The Company has had a couple of reference deployments operating in Europe for several quarters. Subsequent to Q1, we may see a marked increase in activity from Europe as governments in this region begin to deploy relatively significant numbers of units. There may be a possibility of regional distribution agreements (similar to Qwest) by the end of fiscal 2009.
Fly in the Ointment: The Company has reported a skinny balance sheet at the end of Q1, with $0.75 million and a high quarterly burn of over $1.4 million. Of the $1.4 million, approximately $0.5 million could be categorized as one-time expenses, leaving $0.85 million of operating burn. Notwithstanding, this presents forward risk. Offsetting the future burn is a portion of cash received from the approximately $2 million DEFIMNET deployment, along with cash received from the rolling Qwest purchase order. In the short-term Management will be required to manage cash diligently as shipments ramp.
Bottom Line: The Company is finally now in the middle of the ramp that investors have been waiting for patiently for many quarters. The new challenge is that growth will need to be managed with a skinny balance sheet.
Disclosure: I do not own shares of Qwest or Route1.
Gross margins were reported at 73%, which Management believes to be a typical range going forward. This is good news for investors as the Qwest deployment begins to take off. Management expects that a vast majority of the Qwest's first order should be shipped by the end of the summer, with close to 10% of the order already shipped only three weeks subsequent to completion of the DEFIMNET roll-out.
An Interesting Market Development: The Swine Flu Pandemic has created more urgency among U.S. government agencies to get government employees set up to work from home. The TruOffice deployments on the DEFIMNET fits under several "emergency preparedness" initiatives that have become more prominent as the cases of Swine Flu have increased. Route1 should benefit from increased velocity of deployment, as well as from more potential demand from U.S. Government agencies thoughout the year.
Don't Forget Europe: The Company has had a couple of reference deployments operating in Europe for several quarters. Subsequent to Q1, we may see a marked increase in activity from Europe as governments in this region begin to deploy relatively significant numbers of units. There may be a possibility of regional distribution agreements (similar to Qwest) by the end of fiscal 2009.
Fly in the Ointment: The Company has reported a skinny balance sheet at the end of Q1, with $0.75 million and a high quarterly burn of over $1.4 million. Of the $1.4 million, approximately $0.5 million could be categorized as one-time expenses, leaving $0.85 million of operating burn. Notwithstanding, this presents forward risk. Offsetting the future burn is a portion of cash received from the approximately $2 million DEFIMNET deployment, along with cash received from the rolling Qwest purchase order. In the short-term Management will be required to manage cash diligently as shipments ramp.
Bottom Line: The Company is finally now in the middle of the ramp that investors have been waiting for patiently for many quarters. The new challenge is that growth will need to be managed with a skinny balance sheet.
Disclosure: I do not own shares of Qwest or Route1.
5/15/09
Customer Pain Seeps into Nstein (EIN.TO) Q1 Results.
First of all, even as its recurring revenues continue to expand as a portion of the total, Nstein generates most of its quarterly revenues from large enterprise licenses. As a result, quarterly results are sensitive to the buying decisions of its prospective customers. During Q4 2008, the company beat expectations as major implementations were initiated, while Q1 2009 is likely to be considered by analysts to be a miss. The lumpiness makes it difficult to forecast results and future earnings performance. This is why analysts prefer stocks with recurring revenue models.
Nstein's Q1 results are impacted by delays in purchasing decisions by its publisher market niche because the sector is under extreme financial stress due mostly to the cratering of CPM rates, and a significant decline in advertising campaigns by marketers. Essentially, publishers were conserving cash during the quarter. In the future, economists are likely to identify Q1, 2009 as the bottom of the recession, which is good news for Nstein, and may result in some performance recovery in the latter half of FY 2009.
As the world economy begins to recover during the last half of 2009, investors may see some pent up performance as delayed CMS investment decisions pile up, especially during Q4, 2009. During the past two years, Nstein's Q4 has consistently performed ahead of expectations.
The Company has $6.7 million in cash and only $0.4 million in long-term debt, so it has adequate balance sheet strength for the remainder of the recession. A focus on recurring revenue by Management, either through business model tweaks, or via acquisitions would also help to smooth out quarterly performance and help to improve predictability on future cashflows.
Nstein's Q1 results are impacted by delays in purchasing decisions by its publisher market niche because the sector is under extreme financial stress due mostly to the cratering of CPM rates, and a significant decline in advertising campaigns by marketers. Essentially, publishers were conserving cash during the quarter. In the future, economists are likely to identify Q1, 2009 as the bottom of the recession, which is good news for Nstein, and may result in some performance recovery in the latter half of FY 2009.
As the world economy begins to recover during the last half of 2009, investors may see some pent up performance as delayed CMS investment decisions pile up, especially during Q4, 2009. During the past two years, Nstein's Q4 has consistently performed ahead of expectations.
The Company has $6.7 million in cash and only $0.4 million in long-term debt, so it has adequate balance sheet strength for the remainder of the recession. A focus on recurring revenue by Management, either through business model tweaks, or via acquisitions would also help to smooth out quarterly performance and help to improve predictability on future cashflows.
5/8/09
Cyberplex Q1 Results: Maintains Remarkable Momentum
When a micro-cap company reports an anomalous blow-out quarter (like Cyberplex did for Q4 2008 results), investors often become nervous about successive quarterly results. Is the blow-out quarter evidence of a single lucky event, or is it a true sign of progress? Experienced investors have been burned in the past by false trends disguised as inflection points, so Q1 performance was an important gauge of true progress.
Based on the Q1 results reported by Cyberplex (CX-TSX) last night, investors should be heartened that the company has hit a significant inflection points and has progressed from a story with future potential, to one measured by earnings performance for investors. Sales for the quarter increased to $32.1 million, up 307% from sales reported for Q1, 2008. EBITDA was reported at $4.3 million, and net income came in at $4.1 million or $0.07 EPS for the quarter. By comparison, the company reported EPS of $0.00 for Q1, 2008, and $0.11 for Q4, 2009. As a reminder, typically, one-third of sales and earnings occur during the Q4 reporting period. Earnings margins, excluding foreign exchange fluctuations were reported at 12% versus 13% for Q4, 2008, while gross margins came in at 31%, down 1% from Q4, 2008. The margin fluctuation should be considered in-line with analysts expectations.
During the conference call, Management continued to stress that performance-based advertising is relatively new to the market and is at the early stages of adoption by marketers and advertising agencies. Campaign concentration has decreased for Q1, with the top ten campaigns representing 55% of revenues versus 67% during Q4, 2008. As more campaigns are adopted by more advertisers, investors should continue to see less campaign concentration over the coming quarters, which should strengthen the quality of revenue streams as they grow. Management reported that approximately 70% of Q1 campaigns were repeated from the previous quarter, which infers that clients are maintaining investments in CPA-based online marketing.
Net income for Q2 onward should be impacted by taxes, measured at approximately 30%. As well, seasonality should impact performance for both Q2 and Q3, where traditional dips in online activity occur, with Q4 generating 30% of sales and earnings for the year.
Based on the earnings preview from earlier this week, the Company exceeded expectations for this quarter in both sales and earnings. Clearly, the market has been anticipating a solid quarter, although performance may still have exceeded elevated expectations. Currently, the shareprice is trading at approximately 5.7x run-rate EBITDA and 7.5x fully taxed run-rate EPS for FY 2009. The P/E ratio ratio for the TSX Equity index is currently 15.6 with many issuers reporting earnings declines for Q1, 2009. With its impressive earnings growth, and apparently robust outlook, the stock appears to continue to be undervalued relative to the TSX based on a P/E comparison, despite its recent share price run. Adding to this, high growth earnings stocks typical trade higher than the index mean.
Investors may still be concerned about fragile revenue streams due to campaign and product category concentration. However, with new publishers, affiliates, and advertisers coming on, and a 21% sequential decline in reported concentration, this risk appears to be diminishing.
Finally, the Company has $4.7 million in cash and generated approximately $0.05 per fully diluted share of free cashflow for the quarter.
Investors should anticipate that performance exceeded most analysts elevated expectations for Q1 results.
Disclosure: I own shares of CX.
Based on the Q1 results reported by Cyberplex (CX-TSX) last night, investors should be heartened that the company has hit a significant inflection points and has progressed from a story with future potential, to one measured by earnings performance for investors. Sales for the quarter increased to $32.1 million, up 307% from sales reported for Q1, 2008. EBITDA was reported at $4.3 million, and net income came in at $4.1 million or $0.07 EPS for the quarter. By comparison, the company reported EPS of $0.00 for Q1, 2008, and $0.11 for Q4, 2009. As a reminder, typically, one-third of sales and earnings occur during the Q4 reporting period. Earnings margins, excluding foreign exchange fluctuations were reported at 12% versus 13% for Q4, 2008, while gross margins came in at 31%, down 1% from Q4, 2008. The margin fluctuation should be considered in-line with analysts expectations.
During the conference call, Management continued to stress that performance-based advertising is relatively new to the market and is at the early stages of adoption by marketers and advertising agencies. Campaign concentration has decreased for Q1, with the top ten campaigns representing 55% of revenues versus 67% during Q4, 2008. As more campaigns are adopted by more advertisers, investors should continue to see less campaign concentration over the coming quarters, which should strengthen the quality of revenue streams as they grow. Management reported that approximately 70% of Q1 campaigns were repeated from the previous quarter, which infers that clients are maintaining investments in CPA-based online marketing.
Net income for Q2 onward should be impacted by taxes, measured at approximately 30%. As well, seasonality should impact performance for both Q2 and Q3, where traditional dips in online activity occur, with Q4 generating 30% of sales and earnings for the year.
Based on the earnings preview from earlier this week, the Company exceeded expectations for this quarter in both sales and earnings. Clearly, the market has been anticipating a solid quarter, although performance may still have exceeded elevated expectations. Currently, the shareprice is trading at approximately 5.7x run-rate EBITDA and 7.5x fully taxed run-rate EPS for FY 2009. The P/E ratio ratio for the TSX Equity index is currently 15.6 with many issuers reporting earnings declines for Q1, 2009. With its impressive earnings growth, and apparently robust outlook, the stock appears to continue to be undervalued relative to the TSX based on a P/E comparison, despite its recent share price run. Adding to this, high growth earnings stocks typical trade higher than the index mean.
Investors may still be concerned about fragile revenue streams due to campaign and product category concentration. However, with new publishers, affiliates, and advertisers coming on, and a 21% sequential decline in reported concentration, this risk appears to be diminishing.
Finally, the Company has $4.7 million in cash and generated approximately $0.05 per fully diluted share of free cashflow for the quarter.
Investors should anticipate that performance exceeded most analysts elevated expectations for Q1 results.
Disclosure: I own shares of CX.
5/7/09
Points International (PTS.TO) Q1 Results: Concedes More Margin; Bullish Outlook
Revenue for Q1 2009 was reported at $21.1 million, a 30% increase over previous year Q1. Principle revenue represented $19.8 million or 94% of total revenues. The company reported a 48% increase for this revenue stream over previous year Q1.
Sequentially from Q4, revenues were down approximately 3% from Q4, 2008. There is typically some seasonality in revenues, so the sequential decline is not unexpected.
The Company lost $1.1 million or $0.01 loss per share for Q1 2009 versus $0.9 net income, or $0.01 EPS during Q1, 2009.
Management still maintains revenue guidance of between $85 million and $95 million for FY 2009 with positive annual EBITDA. Guidance would suggest that management is anticipating significantly better quarterly performance for the remainder of 2009. Since revenue is over 90% recurring, the company has historically had pretty good visibility on future performance.
The company continues to provide margin concessions to its biggest clients (in particular Delta Airlines (DAL.NYSE)) in order to drive more transactions, and more revenue. As its clients continue to grind Points International on margins, investors should begin to wonder if the shift to the principal model has delivered the margin leverage that was originally expected.
The company has finally signed Continental Airlines as a client (Global Points Exchange). This is good news, although the potential for GPX continues to be speculative. Today the service is still in beta and there are 134 trades posted on the website, up by a dozen or so from earlier this year. The company does not publish results for this program, so the daily volume of trades is not known. Also, Management signalled that it was about to ramp investment into the points.com consumer portal. Transactions on the consumer site represent 11% of the total volume of reported total transactions for the quarter. There are approximately 2.1 million registered users, up 15% from Q1 2008. However, the website is not perceived by consumers to be a destination, and traffic levels have averaged in the 100k - 200k range per month for some time.
Investors may like the bullish outlook for the remainder of 2009, however there should continue to be some concerns regarding the 3 quarters of reported declining margins on the principal revenue. The aggressive investment focus on the consumer portal may concern some investors since that line of business has remained (over many quarters) a small contributor to total sales and profits.
What will the analysts think? Expectations for this company have declined significantly since the beginning of 2008. The margin performance should continue to be a concern to some, and the GPX story may begin to lose its lustre. As a result, today investors should expect mixed opinions from analysts that cover the story and it is unlikely that there would be upward adjustment to forecasts and targets.
Disclosure: I do not own shares of PTS or DAL.
Sequentially from Q4, revenues were down approximately 3% from Q4, 2008. There is typically some seasonality in revenues, so the sequential decline is not unexpected.
The Company lost $1.1 million or $0.01 loss per share for Q1 2009 versus $0.9 net income, or $0.01 EPS during Q1, 2009.
Management still maintains revenue guidance of between $85 million and $95 million for FY 2009 with positive annual EBITDA. Guidance would suggest that management is anticipating significantly better quarterly performance for the remainder of 2009. Since revenue is over 90% recurring, the company has historically had pretty good visibility on future performance.
The company continues to provide margin concessions to its biggest clients (in particular Delta Airlines (DAL.NYSE)) in order to drive more transactions, and more revenue. As its clients continue to grind Points International on margins, investors should begin to wonder if the shift to the principal model has delivered the margin leverage that was originally expected.
The company has finally signed Continental Airlines as a client (Global Points Exchange). This is good news, although the potential for GPX continues to be speculative. Today the service is still in beta and there are 134 trades posted on the website, up by a dozen or so from earlier this year. The company does not publish results for this program, so the daily volume of trades is not known. Also, Management signalled that it was about to ramp investment into the points.com consumer portal. Transactions on the consumer site represent 11% of the total volume of reported total transactions for the quarter. There are approximately 2.1 million registered users, up 15% from Q1 2008. However, the website is not perceived by consumers to be a destination, and traffic levels have averaged in the 100k - 200k range per month for some time.
Investors may like the bullish outlook for the remainder of 2009, however there should continue to be some concerns regarding the 3 quarters of reported declining margins on the principal revenue. The aggressive investment focus on the consumer portal may concern some investors since that line of business has remained (over many quarters) a small contributor to total sales and profits.
What will the analysts think? Expectations for this company have declined significantly since the beginning of 2008. The margin performance should continue to be a concern to some, and the GPX story may begin to lose its lustre. As a result, today investors should expect mixed opinions from analysts that cover the story and it is unlikely that there would be upward adjustment to forecasts and targets.
Disclosure: I do not own shares of PTS or DAL.
5/1/09
Bridgewater Systems' (BWC-TSX) Most Excellent Quarter
Today, BWC reported Q1 2009 earnings of $2.9 million or $0.12 EPS. Earnings reported for Q1 were nearly 5% higher than full-year 2008. Sales for Q1 2009 were reported at 14.0 million, a 64% increase over Q1 2008. Earnings appear to have soundly beat analyst expectations, and investors should be pleased.
In its outlook, the Company provided forward guidance for sales of between $54.0 million and $58.0 million with earnings of between $7.0 million and $9.0 million, or $0.29 EPS and $0.36 EPS respectively. Guidance implies earnings growth of between 159% and 233% from FY2008 earnings of $2.8 million.
If quarterly patterns for the previous two years hold out for FY2009, then Company guidance with respect to earnings may be conservative. The implied run-rate on earnings for FY2009 is $11.6 million, or $0.48 EPS, based on Q1 results. For the past two years, Q1 earnings were the weakest and Q4 earnings were the strongest, representing approximately 30% of total reported annual earnings. Even with seasonal dips in sales that may occur in Q3, trends may suggest that there is a strong possibility that earnings would come in at the high end of guidance, or possibly exceed guidance.
With current market trends related to mobile data usage and the resulting associated complexities, the Company should see continued robust demand for its solutions from carriers worldwide. The Company may also benefit from improved market conditions during Q4, traditionally its strongest quarter, as the world economy begins to recover.
With $53.9 million of cash on its balance sheet, and free cash flow possibly in excess of $10 million, the Company could end the year with approximately $2.60 cash per share on its balance sheet if it does no acquisitions.
At the end of day yesterday, shares were trading at 13.75x the most conservative earnings guidance, and 10.7x the most aggressive guided earnings growth. Historically, similar earnings growth would result in multiples that could range between 20x and 30x, depending on earnings margins. Basically, there is a lot of room for the share price to increase.
With such a strong Q1 beat on estimates, and a typical seasonal performance weighting towards Q4, investors may see analysts adjust their forecasts upward for BWC and the stock price should continue on its upward trend.
Disclosure: I own shares of BWC.
In its outlook, the Company provided forward guidance for sales of between $54.0 million and $58.0 million with earnings of between $7.0 million and $9.0 million, or $0.29 EPS and $0.36 EPS respectively. Guidance implies earnings growth of between 159% and 233% from FY2008 earnings of $2.8 million.
If quarterly patterns for the previous two years hold out for FY2009, then Company guidance with respect to earnings may be conservative. The implied run-rate on earnings for FY2009 is $11.6 million, or $0.48 EPS, based on Q1 results. For the past two years, Q1 earnings were the weakest and Q4 earnings were the strongest, representing approximately 30% of total reported annual earnings. Even with seasonal dips in sales that may occur in Q3, trends may suggest that there is a strong possibility that earnings would come in at the high end of guidance, or possibly exceed guidance.
With current market trends related to mobile data usage and the resulting associated complexities, the Company should see continued robust demand for its solutions from carriers worldwide. The Company may also benefit from improved market conditions during Q4, traditionally its strongest quarter, as the world economy begins to recover.
With $53.9 million of cash on its balance sheet, and free cash flow possibly in excess of $10 million, the Company could end the year with approximately $2.60 cash per share on its balance sheet if it does no acquisitions.
At the end of day yesterday, shares were trading at 13.75x the most conservative earnings guidance, and 10.7x the most aggressive guided earnings growth. Historically, similar earnings growth would result in multiples that could range between 20x and 30x, depending on earnings margins. Basically, there is a lot of room for the share price to increase.
With such a strong Q1 beat on estimates, and a typical seasonal performance weighting towards Q4, investors may see analysts adjust their forecasts upward for BWC and the stock price should continue on its upward trend.
Disclosure: I own shares of BWC.
4/23/09
Guestlogix (GXI.V) Reports Strong Q1: Bullish Outlook
GXI reported Q1 today with revenue of $4.0 million, up 185% over Q1 2008 revenue of $1.4 million, with EBITDA of $0.8 million up from $0.1 million for Q1 2008. Total passenger trips under contract was reported at 824 million with 456 million deployed. Contracted passenger trips increased 17.1% sequentially from Q4 2008, and deployed passengers increased 15.4% over Q4 2008. Deployment is expected to accelerate over Q2 and Q3 as United, Continental, Saudi Airlines, and the undisclosed European carrier are brought online. Currently, the Company has 24 paying customers. Investors should consider Q1 results to be positive.
During the conference call, the Company disclosed that the entire $4.0 million in sales recorded during the quarter was recurring. The EBITDA margin was 21% and the Company disclosed that EBITDA margin is expected to increase to closer to 30% by fiscal year end. The Company disclosed that it expected monthly recurring revenue to increase to $2.0 million by year end, inferring that quarterly EBITDA should be in the $1.8 million range. If the Company is able to successfully conclude its ongoing litigation situation with Abanco (from Chicago), EBITDA would be positively impacted by approximately $0.25 million per quarter.
Please see my post on April 15th. The story remains fundamentally intact with possible acceleration related to future deployments, and roll-outs and adoption of merchandising programs.
The seven analysts are likely to find Q1 results and the general outlook to be positive. The Company is guiding EBITDA and sales generally higher than the mean estimate by analysts. Conservative analysts are likely to adjust forecasts upward. Bullish analysts are likely to remain bullish.
As a result, investors should see two trends occur. First, the variance among analysts is likely to tighten as some that were predicting lower annualized EBITDA and net income losses for the year are more likely to increase forecasts. This would infer that the mean target could be upgraded to a consensus target. Secondly, the mean forecasted target of $1.26 (in previous post) may increase by a few cents and become more of a consensus.
With tighter variances in forecasts by analysts, and possibly a higher consensus, investors may be more comfortable with the general direction of forecasts, and may be more inclined to buy the stock. Even with its remarkable run to todays price at $0.71 from $0.30 at the beginning of April, investors may take comfort that there is more upside in the stock.
To re-iterate: Guestlogix is positioned as the dominant platform for in-flight retailing in the North American market, and is the self-proclaimed de-facto standard. Over time, GXI could become the primary gateway to in-flight retailing for merchandisers in North America. This is a good spot to be for investors.
During the conference call, the Company disclosed that the entire $4.0 million in sales recorded during the quarter was recurring. The EBITDA margin was 21% and the Company disclosed that EBITDA margin is expected to increase to closer to 30% by fiscal year end. The Company disclosed that it expected monthly recurring revenue to increase to $2.0 million by year end, inferring that quarterly EBITDA should be in the $1.8 million range. If the Company is able to successfully conclude its ongoing litigation situation with Abanco (from Chicago), EBITDA would be positively impacted by approximately $0.25 million per quarter.
Please see my post on April 15th. The story remains fundamentally intact with possible acceleration related to future deployments, and roll-outs and adoption of merchandising programs.
The seven analysts are likely to find Q1 results and the general outlook to be positive. The Company is guiding EBITDA and sales generally higher than the mean estimate by analysts. Conservative analysts are likely to adjust forecasts upward. Bullish analysts are likely to remain bullish.
As a result, investors should see two trends occur. First, the variance among analysts is likely to tighten as some that were predicting lower annualized EBITDA and net income losses for the year are more likely to increase forecasts. This would infer that the mean target could be upgraded to a consensus target. Secondly, the mean forecasted target of $1.26 (in previous post) may increase by a few cents and become more of a consensus.
With tighter variances in forecasts by analysts, and possibly a higher consensus, investors may be more comfortable with the general direction of forecasts, and may be more inclined to buy the stock. Even with its remarkable run to todays price at $0.71 from $0.30 at the beginning of April, investors may take comfort that there is more upside in the stock.
To re-iterate: Guestlogix is positioned as the dominant platform for in-flight retailing in the North American market, and is the self-proclaimed de-facto standard. Over time, GXI could become the primary gateway to in-flight retailing for merchandisers in North America. This is a good spot to be for investors.
2/5/09
HotThoughts: GXI-TSXV; RC-TSX
This morning GXI announced another contract with a U.S. major. Based on its preview of Q4 results published on January 22nd, one could suppose that its passenger trips under contract likely increases from 703 million to close to 770 million and its backlog increases from 250 million to close to 320 million. If this contract includes minimum transaction guarantees, investors should see a notable step up in month run-rates sometime near the end of the second quarter. Company has about 6 million in cash, and should begin generating earnings by mid-year.
RDM Corp reported its Q1 2009 quarter, which was flat from Q1 2008 at $7.1 million. It lost $0.08 per share compared to $0.00 EPS in the previous quarter due primarily to losses on forward FX contracts. However, its cash position was virtually unchanged from Q4 2008 with $17.3 million in cash. Excellent growth in its payment processing business was offset by continued weakness in its device business. With a market cap of $16.6 million, and no debt, it is trading at a negative enterprise value. RDM Corp is one of those microcap tech Companies that could use its balance sheet to make accretive acquistions in the payment processing industry. (see the Feb 3 post). Management could also get really bold and jettison its device business. Clearly, investors don't seem to value it.
I do not own shares of either Company.
RDM Corp reported its Q1 2009 quarter, which was flat from Q1 2008 at $7.1 million. It lost $0.08 per share compared to $0.00 EPS in the previous quarter due primarily to losses on forward FX contracts. However, its cash position was virtually unchanged from Q4 2008 with $17.3 million in cash. Excellent growth in its payment processing business was offset by continued weakness in its device business. With a market cap of $16.6 million, and no debt, it is trading at a negative enterprise value. RDM Corp is one of those microcap tech Companies that could use its balance sheet to make accretive acquistions in the payment processing industry. (see the Feb 3 post). Management could also get really bold and jettison its device business. Clearly, investors don't seem to value it.
I do not own shares of either Company.
Cisco (CSCO-Q) Beats Expectations; Downward Guidance Good Opportunity for Longs
Cisco reported Q2 earnings last night and managed to beat lowered analyst expectations handily in terms of top-line and especially bottom line, reporting $0.38 EPS versus the consensus of $0.32 EPS. The Company generated $3.2 billion dollars in cashflow during the quarter on $9.1 billion in sales. The cashflow margin was 35% and the Company now has $29.5 billion dollars in cash on its balance sheet. Normally, this would be a very good spot to be...except for the 3rd quarter guidance offered by the Company.
Analysts had expected a flat Q3, but the Company has guided for a 15% to 20% decline in sales. As a technology company with one of the most international footprints around, Cisco has an unparalleled viewpoint on the strength of the world economy, and as expected, the first quarter of calendar 2009 looks really bad. The first half looks just plain bad.
The CEO continues to guide that it expected the Company to grow on an annualized basis between 12% and 17% for the long term. So there is longer-term optimism. With its huge balance sheet, cash generating capabilities, and its long-term growth prospects, it would be a great time to get into the stock after the traders are done pummelling it today.
I do not own Cisco stock...yet.
Analysts had expected a flat Q3, but the Company has guided for a 15% to 20% decline in sales. As a technology company with one of the most international footprints around, Cisco has an unparalleled viewpoint on the strength of the world economy, and as expected, the first quarter of calendar 2009 looks really bad. The first half looks just plain bad.
The CEO continues to guide that it expected the Company to grow on an annualized basis between 12% and 17% for the long term. So there is longer-term optimism. With its huge balance sheet, cash generating capabilities, and its long-term growth prospects, it would be a great time to get into the stock after the traders are done pummelling it today.
I do not own Cisco stock...yet.
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