DRO (ASX) Ann: Quarterly Activities/Appendix 4C Cash Flow Report

Originally posted by Mayi ↑

Agree. These are a confusing set of numbers - not because of anything the company has done, just because the numbers in each Q are distorted by the timing of payments. Obviously they have just received part of the $33 M payment in Q4.

I did an analysis of the Q3 numbers a week ago in one of the other threads. I came up with YTD revenue of 33M, which is pretty close to the middle of the actual Q3 numbers and the revised October figure. So that seems all pretty reasonable. I was also concerned about cost blow outs. I predicted a conservative 15M and definitely didn't want to go above that figure. It came in at $14M so a tick there too.

Overall on the numbers I'd definitely give DRO a solid passing mark. This is good for shareholders because Oleg has a long history of over promising and over delivering, but that doesn't appear to have occurred here. I hope those days are over.

My questions are about what the "$51m contracted order backlog" really means as the presentation does not explain whether any or all of the backlog is the $33 M backlog. I will used to methodologies to give a range of values

Method 1:
Start with the actual Q3 numbers and assume the backlog refers to the end of Q3. Assuming I accept Oleg's assertion of 68 M in revenue for 2023, that means there is $45 M to come in Q4 and the backlog means that so far forward sales for 2024 are at $6 M

Method 2:
Start with the October numbers and assume the backlog is from that point. That would mean there are $20 M of orders to come in Q4 and the rest will come in 2024. That would leave $31 M.

A range of $6 M - $31 M is not very helpful from a shareholders point of view, so the question remains which one should we believe?

I'd go for something much closer to the lower end.

Reasons are as follows:
1) Always better to go conservative
2) In the actual Q3 numbers the sales were about $7.7 M. If we presume, no payments for the $33 M came in or whatever did come in will be replaced with growth that suggests underly recurring revenue of about $8 M per quarter (again pretty good)
3) No new big orders have been announced in the last 3-4 months, so a quadrupling of revenue seems implausible

My estimate is $8 M (a little higher than the Q3 run-rate)

Applying that run-rate to 2024 that leaves DRO with expected revenue of $32 M. Probably to keep the share price where it is DRO will need to match 2023's. That suggests that DRO needs about $35 M of big orders to retain its position. That's not surprising given that is a little less than last year and a bit easier to achieve. That's ok too.

My view is that all of this tells us that a big order before Christmas (e.g. > $15-20 M) is likely to be a a big positive for the share price otherwise it will probably drift.

Expand

Backlog is at the date of the report - based on q1 stating that (see quote below), and the $33m order falling just after June 30th. It is not really confusing when you factor in the size of announced contracts. We have forex fluctuations to take into account as well as revenue recognition policies. We don't know how much is hardware and how much is other services such as warranty, or consulting or future upgrade promises etc.

Method 2 is obviously correct IMO as at today's date. However the q1 backlog was defined "Order backlog of $22 million as of the date of this report (committed contract payments due to
be paid this year), and a $200 million+ in sales pipeline." So there may have been a slight shift in backlog definition there.

cheers

No.	Vol.	Price($)
3	17093	92.0¢

No.

Vol.

Price($)

17093

92.0¢

Price($)	Vol.	No.
92.5¢	17300	2

Price($)

Vol.

No.

92.5¢

17300

No.	Vol.	Price($)
1	10498	0.920
1	50	0.915
3	15815	0.910
2	75000	0.905
6	43121	0.900

No.

Vol.

Price($)

10498

0.920

0.915

15815

0.910

75000

0.905

43121

0.900

Price($)	Vol.	No.
0.925	17300	2
0.930	27247	3
0.935	5744	1
0.940	26100	3
0.945	22013	4

Price($)

Vol.

No.

0.925

17300

0.930

27247

0.935

5744

0.940

26100

0.945

22013

(20min delay)
Last 92.0¢		Change 0.025(2.79%)		Mkt cap ! $665.5M

Open	High	Low	Value	Volume
89.0¢	92.5¢	87.5¢	$3.015M	3.323M


Last 92.5¢		Change 0.025 ( 3.41 %)
Open	High	Low	Volume
88.5¢	92.5¢	87.5¢	741248
Last updated 15.59pm 24/05/2024 ?

Backlog is at the date of the report - based on q1 stating that...

Featured News

Webinar: What investors should know about what it takes for ASX-listed companies to get medical developments to market

Week 21 Wrap: NVIDIA's profits are up 600% – but this time, the market didn't really care

PlaySide to take gamers back to Westeros with new PC title

The Telstra twist - What the job cuts decision mean for investors?

Althea on a high as it opens cannabis drinks in the US with Flora Growth

Buyers (Bids)

Sellers (Offers)

Featured News

Backlog is at the date of the report - based on q1 stating that...

Featured News

Top Stories

Webinar: What investors should know about what it takes for ASX-listed companies to get medical developments to market

Week 21 Wrap: NVIDIA's profits are up 600% – but this time, the market didn't really care

PlaySide to take gamers back to Westeros with new PC title

The Telstra twist - What the job cuts decision mean for investors?

Althea on a high as it opens cannabis drinks in the US with Flora Growth

Buyers (Bids)

Sellers (Offers)

Featured News