I thought I would post a new thread for the new coy that BUD technologies has become and post a few expectations on the upcoming quarterly and the year ahead.
I thought it would be useful to post a chart of Apples revenue by quarter. Reason being it is a consumer electronics companies and provides a picture of behaviour in this industry. What is very clear is that Oct-Dec period is by far the best period followed by Jan-March with April - June being the weakest quarter of the year. I expect this to be a pattern that is followed by LIFX revenue. Previously we know that LIFX ran out of stock and so Jan-Mar was their worst period, but this was fixed this year and resulted in a jump to revenues to $8.75m. Bud only received 6 days of that revenue.
With April-Jun traditionally being the slowest quarter of the year, I am anticipating a revenue number between $6-$7m, with the July - Sept quarter to be back towards the $12m+ followed by $40m+ in the final quarter (due to debt financing being in place to cope with large orders that were rejected last year.) That will get the coy to over $66m in revenues and a 70% uplift of 2018 revenue of $38.5m. As to what the NPAT of these numbers are and the Gross margin improvements, non of these will be seen until 31 Jan 2020. Also remember that performance shares are based off the first hurdle of $100m in revenue in the first 18 months.
The other component to this quarterly is OHM and cloud. As we know, costs/staff were cut dramatically last quarter, taking effect in mid April. Wattwaters began intergration with OHM. So it can be expected that OHM sales were at best flat whilst trials continued with the new OHM/WW product. I have no real expectations on what the resellers have been doing during this period and will look for guidance in the commentary.
The final part is about the share price and the coy market cap. How should it be evaluated? On a revenue multiple or a EBITDA multiple or something much more in the startup hemisphere, where the Market cap is based future expectations of revenue. IMHO, BUD/LiFX is still in its infancy and very much somewhere between a startup and a solid revenue making coy. Some trolls would have use believe that BUD's Market cap multiple should be something like beacon lighting, which is about 0.85 times it revenue. LIFX differs incredibly to beacon. Beacon is a retail bricks and motar operation, in Australia, selling light fittings/ fans and bulbs. LIFX is the world second largest smart light seller, with sales in 1000's of stores globally through, best buy, home depot, bunnings, jb hi fi, apple and they are partnering/bundling with google/assist and amazon/alexa on a global scale in the fast growing smart home technology sector. Audio pixels is a $460m coy with $90k in revenue!! Breville is an established coy that trades off a 6.5 times revenue to market cap. So its very clear the answer to valuing of BUD is very subjective. But one certainty is that
if the projected revenues of $66M and profitability are achieved this calendar year the current market cap around the $85m area is clearly missed priced and extremely under valued by many multiples.
So why is it here? IMO firstly, the market doesn't believe in the projections, they want to see it in print. Secondly, there have also been an unusual amount of sellers from ex employees who have been surplus to requirements from the takeover, or are part of the cost cutting. Third, current employees had tax obligations. Fourth original LIFX sophisticated investors have gain liquidity from the takeover, and the final reason is the chartist traders are closing out positions based of the the technical charts and not the fundamentals.
On the bright side, I believe this quarter will be taken positively and in the following 6 months should be getting a lot of updates regards new product releases, sales volume information, new distribution outlet information and the likes. We also have a solid business with Airsteam/Thor that could expand and then there is always the prospect that resellers will do as they told us they would do and make significant sales or that one of the OHM/WW whales finally pull the trigger and OHM/WW becomes a success/profitable unto itself.
Love the hear back some informed non emotional responses.
