I posted the below exercise of trying to predict LVT’s cashbalance going forward a few months ago and I’m pleased to say that it actuallylooks a lot better now due to the recent capital raising and the additional revenuefrom Wizdom.
Cash balance at 31/12/2018 was $22.5m + $5.3m (from the recentplacement net of fees and the upfront cash payment for Wizdom) = $27.8m
$14.8m per quarter opex (combined for LVT and Wizdom asannounced recently)
LVT revenue for last quarter was $4m (admittedly the lastfew quarters have been volatile in terms of actual cash collections and thismay well continue) + Wizdom quarterly revenue of $2m (this is conservative asrevenue for 2018 was $12m but ARR at 31/12/2018 was $8m so I’m treating thequarterly number as $2m) = $6m combined quarterly revenue (I’m assuming thatthis will grow by $2m per quarter which I think will hopefully prove accurateto slightly conservative)
So based on the above the cash balances going forward (theyears are financial years) would be:
End Q3 2019 27.8m + 8m - 14.8m = 21m
End Q4 2019 21m + 10m - 14.8m = 16.2m
End Q1 2020 16.2m + 12m - 14.8m - 4.9m (max. cash earnoutfor Wizdom in Jan. 2020) = 8.5m
End Q2 2020 8.5m + 14m - 14.8m = 7.7m
End Q3 2020 7.7m + 16m - 14.8m = 8.9m
End Q4 2020 8.9m + 18m - 14.8m = 12.1m
There’s a lot of assumptions in there but I don’t thinkthey’re unrealistic. Probably the most likely thing that would change thesenumbers would be another acquisition(s) which unfortunately is entirely feasible.I recognise the whole “this is a hyper growth company” and “Australians justdon’t understand tech companies” arguments that LVT management espouses, butthe reality is that these points are entirely correct and are not going tochange any time soon, and the company is obviously not listed on the NASDAQ. Ithink they need to realise this and start running the company for allshareholders, some of whom (like me) would rather see the share price highernow and potentially not achieve stratospheric growth as quickly as they mightotherwise. This share price is just ridiculous, and if they can just focus onrunning the company, getting to cashflow break even and forgetting about any furthercapital raisings for a good eighteen months at least, the share price mightactually get some traction! Love the long term outlook but the current shareprice speaks volumes about how Australian investors currently view it. I thinkthis company can grow to dwarf the ALUs and WTCs of the Australian market dueto the global opportunity on offer and the fact that their products essentiallycould be used by just about every company and government department on theplanet as opposed to being constrained to one industry, but they need to crawlbefore they can run, and I feel like they’re trying to crawl too quickly atpresent! Frustrated but not selling….
