They are going for growth and market share for the long term instead of slow and steady protecting cash, If they do not grow aggressively now they risk not being the number one player in the future. I want to be balanced in first saying the cash loss is disappointing, however most of the negative portion of cash is being invested back into the business, not being paid out on interest and repayments as they have no dept.
Receipts from customers $37.7million, last two quarters was $56million 56/2= $28 million average.. Thats an increase of $9.7million in receipts from the average of the last two quarters.
Below I am of the understanding $5.2million of the $6.1 million loss was reinvested using the negative working capital model mentioned below, this is important to take into consideration, this is reinvestment into the business for the future not paying down past debts as I understand it.
'Total payments to suppliers were $31.8m, an increase of $5.2m over the previous quarter'
'The company proactively increased payments to suppliers by $5.2m to drive down the amounts owing to merchants. This is expected to result in preferential business terms for iBuy, including opening opportunities to sell new products at better prices from high quality brands and vendors. iBuy does not take inventory risk, instead, suppliers provide stock on consignment basis. This result is a negative working capital model, from which the business can fund operations as it grows.'
This loss looks bad at first but the cash is mostly being reinvested. This is why fledgling companies raise cash to spend it not sit on it getting 2.5%interest, the question for investors, is the cash being spent to benefit the business going forward?
Let me know if I'm incorrect, It would be good to get some clarification from management in regards to the $5.2million to suppliers as I can see people are confused.
E88 Price at posting:
19.0¢ Sentiment: Buy Disclosure: Held
