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Thanks for that reply jr. I'll be finicky and say that even on...

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Moosie_900

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02/02/18

08:36

Post #: 30757582
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Originally posted by jr189 ↑

Hi Moosie

Using percentage growth is not really the best way of looking at the return, those are not trends, so lets look at the absolute numbers.

In simple terms;

Sept Qtr to Dec Qtr

Product, Manufacturing + Advertising Costs go from $4.281 m to $7.768m = grew by $3.8m

Revenue grew from $4.11m to $6.9m = Revenue grew by $2.8m

The way I read, in the quarter they invested an additional $3.85m in costs but got revenue growth of $2.8m now that is a pretty damn good ROI, espically given a lot of that was new user acquisition which will continue to contribute into the future. Plus adds more liquidity to pools etc.

Now lets look at Q3 and beyond

If you look at the GT turn over for the first 4 weeks and extrapolate that growth into the full Q3 you’ll get about the same amount of revenue as Q2 i.e. ~$6.9m (that assumes no ladbrokes, no NEDs etc).

If you look at Q3 projected costs in the 4C they project costs for Q3 at $8.9m so costs are dropping by $1.63m.

That gives us a cashflow burn of -$2m ($8.9-$6.9) leaving them at the end of Q3 with $2.7m cash and enough cash for for Q4 and a bit into Q1 of FY19 (assuming no growth).

That gives the company a >7month runway to get ladbrokes and NEDs approved.

If you believe NT approval is “imminent” then the world is good and there is no cap raise.

If you believe there is a fundamental problem with NT then you’d be right to expect a capital raise and if that is being done with out NT approval , it’ll be very harsh.

My view .... they’ll get NT approval within 3-4 weeks, NT has already approved TBH using the GT, so there is clear precedent, in fact they did exactly the same and knocked back TBH initially then approved it pretty soon after. When Ladbrokes and NED comes on some analysts are expecting that to be $10m T/O per week at a net margin of 2%. If that come on at the end of Feb, then they are cash flow positive immediately.

If you are selling because of a cap raise, you’d want to be very sure there isn’t an “imminent” NT approval or you’ll be buying in much higher.

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Thanks for that reply jr. I'll be finicky and say that even on your metrics, expenses ($3.8M) still increased more than revenue ($2.8M)!

Nevertheless, they are cutting it very fine with the cash balance. Prudent companies keep >12 months of cashburn on the balance sheet. I'll stick with my cap raise prospects, as they will need a "buffer", even if they do hit profitability later in the year.

TBH Price at posting: 36.5¢ Sentiment: Sell Disclosure: Not Held
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