Pretty sure she’ll be right mate. SFI has the potential to generate a whopping $30m profit from this gig in the next few months. Don’t forget EagleView belong to the parent company Vista Equity, with it’s 26 billion dollars worth of assets. They are no small fry. On the topic of potential and likely revenue, to use Catchacold’s previous quote:
“To be clear SFI are a license technology play. Customers such as Eagleview license the system and pay an upfront cost for each system. SFI generates revenue/royalty every time a licensee/customer use the systems
The revenue agreement with Eagleview is twofold:
Per sqm capture revenues:
- US$5/AUD$6.70 per sqm captured
Royalties for all new revenues generated by the system at:
- 5% for the first US$100 per sqm
- 10% for >US$100 per sqm
We know EV cover about 750,000 sqm per year. Eagleview are aiming to aggressively ramp up coverage to over 1,500,000 square miles in 2018. The aggressive growth targets have come from the increase in productivity the SFI systems have enabled. EV would never have been able to achieve such aggressive growth without the SFI systems.
How is the revenue calculated.
US$5 per sqm captured royalty
- If EV cover 750,000 sqm per year that equates to US$3,750,000/AUD$5,000,000
- If EV cover 1,500,000 sqm per year that equates to US$7,500,000/AUD$10,000,000
New revenues royalty = US$20 per sqm (based on average industry data of US$250/sqm)
If we use the reported average industry revenue of US$250 per sqm we get the following:
- 5% of the first US$100 per sqm per customer = US$5 per sqm
- 10% of all revenue >US$100 per sqm per customer = US$15 per sqm (10% x US$150 (difference from the US$250 in part 1).
So we get a total of US$25/AUD$33 per sqm of revenue to SFI.
Eagleviews revenue hurdles are:
- US$10m/AUD$13.3m or more in royalties in any 12 month period for 5% equity conversion
- US$20m/AUD$26.7m or more in royalties in any 12 month period for 5% equity conversion
How does it all tie back into revenue to SFI and Eagleview achieving their hurdles and equity conversions:
- Using the US$25 per sqm as our basis we get total potential revenue of US$37,500,000/AUD$50,000,000 (ALL STRAIGHT TO GROSS PROFIT) within 12 months.
- But EV are already generating revenue on 750,000 sqm they already cover. So we calculate all new revenue on the aggressive growth profile which is stated at +100% or an extra 750,000 sqm in 2018. This equals 750,000 x US$20 per sqm = US$15,000,000/AUD$20,000,000.
- If EV cover 1,500,000 sqm per year that equates to US$7,500,000/AUD$10,000,000. SFI generate this revenue per year regardless of any new revenue.
SFI Revenue = Capture revenue of US$7,500,000/AUD$10,000,000 + New Revenue opportunities US$15,000,000/AUD$20,000,000
Total revenue of US$22,500,000/AUD$30,000,000. Straight to GROSS PROFIT.
This is how we get the US$20m within the next 12 month and EV convert their remaining 10% equity. So everyone speaking out yesterday saying the numbers were false have just been shown how they actually work and tie back to Eagleviews hurdles.
I've used the industry average revenue per square mile because we obviously don't have a clue of Eagleviews financials but they are pretty close given the numbers actually marry back up to the growth profile and hurdles figures.
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