Ann: Secures $2.1 Million Performance Marketing Contract, page-86

I'm not sure what your background is but this definitely not an astute conclusion about the announcement. How can the company define and advise upfront the profit generated from this contract? Revenues will be hurdle-based and it would be safe to assume the more milestones hit, the higher the revenues.

How do you determine the profit of this one contract?

Do you want the company to reveal confidential milestone details outlined in the contract with anticipated profit at each stage? What happens if they hire on more staff, should the company trace time spent by each employee and trace it back and expense it against the revenue generated under the contract? Should the time spent by the accounts payable officer who enters in the transaction for the corporate card amount spent by the sales person with the VET client at lunch be accounted for?

The reality is, whilst the contract can be singled out at a good win, you can't really define profit as the expenses are generally pooled together. Even large companies with multiple business units can have trouble clearly attributing expenses to revenues (example: CEO time).

We cannot assume this contract is going to lead to increased costs. In fact, in the IT space, the client will usually pay for the development costs associated with their purchase and attributable gross margins will generally be maintained. Thereafter its usually some kind of transaction clip.

I highly doubt this deal can be described as "loss leader" -- the company deals with some very big names (eg. Bauer Media -- globally EUR 2bn+ company, Westpac) in its existing portfolio. You only go loss leader when it is a marquee name (that you can publicly announce to the world), and I don't know a VET company that's in the ASX 20 like Westpac is, but I'll happily be corrected. Sure, its Performance Factory in the deal, but I'm confident they will point to Mobile Embrace for the track record.

To be clear, I'm not saying its a great announcement nor am I saying its mediocre. It's a good announcement, 2.1m on 33m income last year is circa 6% uplift already, but let's not get carried away with assumptions.