I'm keen to get an understanding of what the revenue growth rates are that the company is expecting in the next 12-24 months.There wasn't really a whole lot of discussion about revenue growth rates in the recent webinar but Yoav did allude to breaking even at some point in the future.
I've been tracking the quarterly revenue growth rates below for the last two years and they've been pretty low to say the least (see below). Yes the recurring revenue % is increasing but it looks like as the business model shifts to subscription the amount of upfront payments for units will decrease. The revenue growth is definitely not aligned with the rate at which new customers are locked in as 'design wins'.
One thing that is pleasing to see is that the expense coverage ratio (i.e % of expenses covered by gross income) has been improving progressively but there is still a long way to go until breakeven. I would suggest this is also masked by the fact that cost of sales is low now as a result of the large inventory of units their holding from the covid period. At some point, more units will need to be manufactured, increasing quarterly costs.
With so many different customers, one can assume that they are only making small orders at this stage. The only way we get hockey stick growth in revenue is if there is major regulatory approvals, allowing companies to expand their operations significantly, thus ordering much larger quantities of HALO. Given there is a US election next year, I'm not so sure we will really see any progress from the FAA in the next 12-18 months.
Also, if there isn't a material shift in revenue growth, then despite what Yoav said (that they are fully funded until the breakeven point), if they are burning upwards of $800k a quarter, then in the above period (12 to 18 months) they will need to raise again, thus further diluting the share price.
Happy to keep holding, as I do firmly believe that when the governments get off their ass and progress regulations, there will be exponential growth.
(20min delay)