Ann: Quarterly Report, page-70

Many people yet again only focused on the headline figures today -- no surprise -- and the gap between revenue and operating costs without digging deeper. As DW8 releases more quarterly reports, the granularity of the metadata increases for those willing to look beyond the headlines to assess how the firm and management is actually doing rather than being swayed by faith ('its a growth story that requires spending') or belief they know better ('these guys will never make any money as they are spending too much'), or vice versa.

On a QoQ basis revenue and operating costs increased by 62.9% and 16.5%, respectively, which by itself is actually quite an accomplishment when considered in the context of historical performance, etc. Dig a bit more and you'll see that things on a rate of change basis are actually surprising and if the firm would have institutional earnings coverage then today would have gone down as a positive surprise vs expectations. Yes, operating costs have increased at the same time that revenue has also increased, yet the rate of change is different which matters more. For example, on a 1-year basis receipts from customers ('revenue') are 4.49x those of 2Q 2020, yet operating costs have only increased by a factor of 3.95x. Of course, the cynics can point towards the arguably substantial gap between the dollar figures of each and how closing it at this speed may take forever. But is that really true? It of course depends heavily on one's assumptions but it speaks to management's operational execution that they managed to shave off a 1x multiple of the 'Operating activities (excl. revenue)/Revenue' metric. So while in 1Q 2021 the firm burned through $3.52 in operating cash to generate $1.00 in revenue (3.52x multiple), that figure dropped by roughly $1.00 or 1x by end of June 2021. How about them apples?!?!



How quickly could the firm get that ratio down to 1x or below 1x to generate a positive net operation cash figure? Again, that depends but I bet that at the moment many investors underestimate the levers increasingly at management's disposal as non-logistics/fulfillment revenue streams start to turn over and they haven't actually gone through today's data, otherwise there would have been much less willingness to part with one's shares during today's trading churn.

Even if we assume those new business line revenue streams are continuing to contribute only marginally to revenue, there is the ability to shave off more of the above-mentioned numerator as a result of reducing inefficiencies from the combined DW8/RWG business and associated cost savings. And the relative scale of RWG's business could have a surprising impact on costs savings, i.e. operational leverage if you will, when compared to the current dollar gap between costs and revenue of DW8's legacy business. It's unlikely that all of these savings or efficiencies will be achieved within one quarter, but if anything the above data shows things can turn rather quickly.

And as Mr. Taylor stated, the objective is to increase the operational efficiency and scale-up, whilst using residual and/or freed up financial means to further accelerate customer acquisition for Market with margins > 80% that would have a leveraged impact on operating cash flow and the metric above. The goals and the play haven't changed and vs. 12 months ago there are more and more data points that illustrate how the firm and management are doing and have been executing. IMO fundamental quantitative and qualitative analysis all line up on this one.

So if today's trading action was indeed instos creating churn to accumulate as they realize there's more to this story than a cursory view indicates, then that should add support to the investment thesis for DW8. If on the other hand it was holders taking ST profits then consider the above as part of your analysis and retest your thesis before you decide whether to add/hold/sell. As those with negative views on DW8 have stated so many times, the data doesn't lie. Well, it really doesn't. DYOR and GLTAH.