If you have cash receipts of $21M and revenues if $13M how else would you explain it in this case other than customers have paid upfront. Cash is very high considering the revenue, where did it come from?
If you can't work out the PE then use other ratio's or another method of analysis, it all works together but all pieces on their own do not provide a clear picture.
First year of cash flow positive or profitability would most likely lead to PE's well above 100 does that mean it is overvalued?
Look at it another way. If 620 new clients were brought on board in the last quarter how much did it cost if 100% of costs were purely to bring them onto the books. There were 3180 other paying subscribers so If 90% of the cost per subscriber is in the initial sales, filming and providing the video clips, how much of the costs would that take up and how much would the ongoing subscribers take as a percentage cost for that period. For these numbers I think it is about 2/3 for new and 1/3 for ongoing. Recalculate and if the cost to bring onboard is less than ARPU you can work out a profit or loss per subscriber. If they pay upfront you get this profit straight away minus a little house keeping, if they pay subscription you may run at a loss for that client until maybe half way through the year, but the profits keep rolling in (especially if they renew their subscription, or upgrade). Sales costs and filming / production I would assume are the big costs, managing ongoing subscription I would have thought would be a minimal cost as pointed out by the company. Also keep in mind sales cost this quarter are most likely for subscribers Brough on board next quarter therefore costs are more concentrated at the beginning of the process. Maybe look at the increase in the cost relative to customer numbers and ARPU, they are all tracking very nicely for a strong company.
BIG Price at posting:
$1.35 Sentiment: Buy Disclosure: Held
