Point taken about the balance sheet, to a point. However, I have found over the years that there is a pattern of bank balance (taking into account equity injections) not matching announced profits (or losses), except the odd year when they announce a huge loss to get the junk off their balance sheet.
On the subject of revenue, I agree with you. My understanding is that their model was to take the big chunk up front and then do a small annual maintenance. Of course the advantage to the annual renewable fee is, as you say, that it gives investors (and customers, for the reasons you've mentioned) a lot more comfort and certainty in the long run. The other advantage is that customers usually only factor in five years of licensing on the basis that they will do a refresh, finish off that grand plan for a unified internal development, buy something a lot bigger and more comprehensive from a major supplier, etc., and, anyway, the bloke who made the decision will have moved on by then anyway... However, once the thing is in it takes an awfully long time to pull it out again. E.g., I've heard people from one of Razor's sites grumble about Razor and how they want to throw it out and how they hate being beholden to a small company, but year after year it is and still will be there. It would be much better now and into the future to have that annual license fee rather than just maintenance. I guess Razor went with that model so as to generate a lot of revenue up front in order to grow the stock price.
There is no clear statement as to what their recurring annual software revenues are, which I have always seen as an inhibitor to stock price growth. As it is investors can never be sure as to the intrinsic value from the software annuities, both from existing contracts and any potential new ones.
RZR Price at posting:
2.5¢ Sentiment: None Disclosure: Not Held
