Can someone help me to understand why the payment terms for their customers are so generous?
I'll admit I don't know much about the story here, I've just been watching the price for the last few months and am intrigued by the potential the recent announcements suggest may be on the cards. However, I am concerned about the cash position and the need for a raise, and to be honest while I love shareholder engagement, I also don't much care for attitude of the CEO in some of these comm's he's given to holders here, seems very unprofessional and arrogant. Seems a bit like Musk on steroids but without a significant track record of success. That aside, I'm keen to know more as it seems there may be a dollar or two to make here.
Back to my question. From the Q1 presentation released 18th March 2019, it seems to me that Engage prepay publishers for ad space at the start of a period (either quarterly or monthly depending on seasonality), and then essentially a customer at some point during the period comes along and buys that space off EN1 at a higher price. Also from the presentation though, "We are paid by our buyers generally within 120 days". So from the time EN1 outlays cash, there is a delay of between 0 and 90 days between a customer buying that inventory, and then there is another huge delay before the customer pays their bill. So not only does the company therefore have a pretty significant inherent financing carry cost, it also is open to the possibility it simply won't recover funds from buyers on a significant scale. Can someone help me understand why I shouldn't be so concerned about the conversion of revenue to cash flow?
EN1 Price at posting:
3.9¢ Sentiment: None Disclosure: Not Held
