The Big PictureIts the post, to the ghost, with the most, even a...

The Big Picture

Its the post, to the ghost, with the most, even a title.

I used to be a fundamental hedge fund trader. I covered hundreds of names, so compared to normal equity analysts, I was very big picture. That is I tried to keep in mind some key points. That's the only way you can respond quickly to news in a big universe, does the news change the big picture?

For BPG my big picture is: Funded to cash flow neutral and $10m ARR in June this year. EV about $30m so trading about 3x ARR. With growth still over 100% and c70% gross margins that multiple should be at least 5x and more likely 10x.

Some details behind the big picture:

• ARR $7m at Feb, gross margin at Sept half year 67% and rising as lower margin legacy business dilutes. Overheads, most of which seem to be fairly fixed, of about $7m. So run rate cash flow neutral when hit about $10m ARR.

• Growing ARR $750k a month based on Jan/Feb, so 128% growth rate and 4 months to hit $10m ARR and cash flow neutral (June).

• Market cap is $34m, cash on hand was $777k at Sept 23, with debt just $400k of govt debt. Add $3.8m proceeds of equity issued post balance date gives net cash $4.2m. EV at balance date $30m.

• Cash burn since Sept. Sept ARR was $4.6m, so in theory burning a receding $200k a month since then. So hopefully burned no more than $1.2m cash in 6 months to today.

Its a bullish big picture, coming up, I will look at some risks.