New holder here. This is not particularly a large holding of mine, but I'm very interested to see-out the rest of the quarter. So wanted to share some thoughts and hear some views from existing holders.
Firstly, it seems KNO receives most of their license revenue for KnowledgeIQ in Q1, this is has always been in the past, and likely will continue come Q1 2021.
Greenorbit and Libero generate approximate 2.8m and 2.2m ARR respectively as laid out in the acquisition overviews, so let's assume that's evenly spread out throughout the year with 3 months contribution from GO and 1 month from Libero which is ~900k.
So putting it all together I'm estimating
receipts of 2.9-3m in Q1. This would be pretty huge given in the whole of FY21 the Company did 3.8m.
The next thing is the expenses. Here I'm going to make the following assumptions based on historical trends. R&D to remain between 100-150k. Product manufacturing to be 200-300k, advertising between 100-200k, staffing costs which is likely to further increase from Libero to be 1.3m and admin to be 300k. Keep in mind these are all just based off the past, so at best it's an educated guess.
Putting that together, it looks like expenses would probably be in the range of
2.1-2.3m. This leaves us with cash inflows of
700 - 900k. Looking at multiples, the Company looks like it's currently trading on 7.6x FY21 ARR (~3.8m). I think if we can apply the same to FY22, assuming a run-rate as per below of 8m, then you get 60m market cap, which is equivalent to approx.
30 cents per share.
It seems the thesis here for me has to be whether KNO can be cash flow positive position from Q2-Q4. For a historically low growth SaaS Company, they've recently recruited a number of new sales staff to change that along with the acquisitions, so if I do decide to hold long I'll definitely be keeping an eye on the revenue to staff costs increments in the next quarter.
Finally, John said in May (coffee microcaps) they are hoping to close one of the enterprise trials this quarter. Historically, it's always generated 1m+ ARR pa. While this is a catalyst, I'm not going to factor this in since it's uncertain whether they'll land it.
I'll make up my mind on whether to keep holding or sell when I see the next quarterly. Hopefully by then we'll have a new enterprise deal as it seems t quite a few people here have had to be patient for a long time.
(20min delay)