conclusions from trying to connect the dots using the data...

conclusions from trying to connect the dots using the data points we have received from the company:

- first, I have noticed that sometimes the terms "revenue" and "cash flow" have been used erroneously in the HC discussion. This is important as the whole point here is that the company did not give us up to date revenue information. By law they are required to give us quarterly cash flow information but not revenue, and this is what we have received.
- As we don't know the revenue for q3.13.mar13 yet, only cash flow, I tried to focus on h1.13.dec12 where both CF and revenue is known.
- nearmap revenue has been rising steadily even before the paywall went up, as enterprise customers always paid. nearmap revenue 1.3, 2.4, 2.6, 3m in h1, h2 fy11 & 12.
- in h1.13.dec13, which includes one month of revenue of new SME segment, revenue jumped to 4m. We only need to find out now how much of that jump is due to the one month revenue from SMEs, and then would be able to annualize that. (CF in h1 should contain only minimal impact from the paywall as most of the initial cash receipts - at most 12 months ahead - have been received in january).
- This however is difficult, as the ratio of CF to revenue in h1.13.dec13 is not materially different from prior years. It turns out h1 was a very strong period for sales to enterprise customers as well. CF grew almost as fast as revenue even though revenue includes one month of paywall SME revenue while CF is unaffected.
- Bottomm line is that i have been playing around with the numbers for some time and tried several avenues, but could not come to any clear conclusions. I encourage everyone to try on their own and share the results here.
- My best guess is that NEA currently is somewhat CF positive on an annual basis, probably also profitable. This makes sense as it was already CF positive in h1 even without the paywall contribution, expenses have increased somewhat since then due to new hires etc, and the traditionally weaker h2 (h2 CF is "only" on par with revenue historically while h1 CF is 30pc higher than revenue historically)
- The co reported new user sales in February/ March over and above what was announced in January, and the cash level has increased by 1m without the effect of litigation and tax receipts. Either some SMEs got free trials after the paywall went up and are only now converting to paying users, or NEA is indeed able to increase sales beyond the initial jump.
- NEA officers have chosen to give the market only the information required by law. What we do know is that they bought their own shares quite aggressively up to 12c.
- I am not worried by Google or Apple starting to compete here. If one of them brought out higher resolution maps, the other would be compelled to match that offer due to competitive pressures. Below 100m market cap, NEA would be a chump change acquisition for any of them (and they might be able to use NEA's patents in their patent war).
- many potential ways to increase revenue and share price here. at this point I am happy to hold even with the uncertainty.