I don't see improving cash flows. like I said it is a free...

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Kingz

168 Posts.

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02/09/19

06:12

Post #: 40269683
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Originally posted by gdaymate: ↑

Lol. COA for each dollar of ARR which is conservatively estimated to be worth 6 years of revenue is under $2.50 (this is a COA including staff and corporate costs as well as marketing so you've got no rebuttal ammunition there). You need to understand two things

1. All of the costs are upfront, then revenue continues to trickle in future. In this case, in year one we spend $2.50 to get $1. So our yearly loss of -$1.5 is -1.5x our revenue. Sound familiar? ($20m rev, -$30m loss excluding one off wizdom)

But what happens in the future. Was that marketing dollar well spent? Yes, the $2.50 turns to $6 over time.

2. The reason ARR from earlier years hasn't resulted in a beautiful balance sheet is simple. ARR has x10 in last 2 years. The profits from then are dwarfed by the costs of scale where we are operating now. This is the cost of growth, and admittedly it doesn't look pretty. But contracts are simply tail ended. Make a model that pays 1/4 of ARR growth in a certain period for every period half year later and you'll see we are operating exactly as we should be. When our growth rate eventually slows as with all small companies, you'll realise this loss wasn't due to lack of operating leverage but rather just speed of scale. It'd be wise of you to realise the improving cash flow for consecutive quarters (not negatively increasing as you said it- are you trying to say decreasing idk).

As for Dwhale, I respect you considering to buy now. If you do, all of your criticism will have been warranted. I hope you at least see the potential upside at the current price. Good to see VMK back as well as always

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I don't see improving cash flows. like I said it is a free world. you can say whatever makes you happy and positively rationalise YOY losses. this is entirely up to your satisfaction.

the annual report produced by the company itself speaks. as I said before the company is not positive with the net operating cash flows from operations.

FY2018 negative $16M
FY2019 negative $33M

negatively increasing by abt 50%.

GLTAH

LVT Price at posting: 35.5¢ Sentiment: None Disclosure: Not Held
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0 Great analysis

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