https://hotcopper.com.au/threads/its-over.4002109/page-248?post_id=35333120#.W4x5708UmAg
BUD annual results out this morning and as alluded last Friday, it is unexciting.
While operating revenues (excluding interest/grants) doubled from $1.05m to $2.08m for the year, its losses remain high at $13.87m (excluding revaluations) although down from ($16.96m) the previous year. A closer look however revealed that Employee expenses grew from $4.36m to $6.44m and the
share based expenses alone were $3.46m which is 166% of the entire year's revenues. This is similar to that in YOJ where you do not see prudence in managing cost and issuance of shares (diluting holders) relative to revenues earned.
In addition, all the fanfare about appointment of world class distributor Ingram Micro has fallen flat and it appears that North American sales failed to gain much traction. I had pointed this out in my example with IOT (stock) where Ingram was also appointed to distribute their drones which failed. Buddy Ohm is only one of many millions of products being sold by Ingram Micro, if it failed to gain traction they are more likely to abandon it especially in this competitive marketplace where Buddy Ohm is no longer uniquely placed to be the only offering with the solution they provide. BIQ which has a much better control optimiser rather than just monitoring platform had better market traction but still proved difficult because it takes a lot of time to gain entry especially large accounts. And this is why people should look at the revenue model of the business - if it takes a long time to penetrate a building account and if successful the amount of revenue earned is not significant (<$1m per deal), it doesn't take much to recognise that the path to profitability will be difficult ahead.
Even assuming that BUD can grow its revenues by 100% each year, it would take them no earlier than 3 years before they can reach breakeven at the rate at which they are spending. And as I mentioned, once it gets to $5m revenues or so, and still bleeding, market would look at them the same way as it did for BIQ and VIV- 'ok good revenue growth but when can it be profitable'. So much for the CEO's earlier indication of an EBITDA positive soon and its lofty revenue forecasts which got it into trouble with ASX.
