It's all about margins, if I am not mistaken the gross margin on this deal could exceed 80%, so for every $1 of sales $0.80 falls to the gross profit line. Now, their operating cost has a large component of fixed cost which means as revenue increases, the cost base does not increase as much.
Which means at scale, this business can generate very impressive net profits. Furthermore, without much in the way of Accounts Receivable (with cash at POS or even prior to sales), plus minimal capital expenditure requirements (Low PPE and minimal intangibles), this means quite impressive free cash flow generation. Therefore you have the basis of a very scalable business model. Granted, the market is pricing in a lot of growth and execution, but arguably there could be more upside as new contracts are entered into.
