Questions for the Webinar, page-232

The reality is that Ohm, in its current incarnation has not lived up to hopes or expectations, be they shareholders, distributors or indeed management. However, the graph above does not really tell us what you think it is telling us. Other than LiFX is going to be transformative on the revenue front. However, as to the ‘blue’ Buddy Platform revenue, we don’t know the quarter by quarter split between Ohm, Thor/Airstream and ‘other, (if any). Speaking for myself, the webinar disclosed something that I was previously unaware of, and which had clouded by previous assumptions when trying to disassemble revenue: and that is the the Thor SoW retainer was not broadly constant on a month to month basis. Hence, not possible to determine Ohm or ‘other’ (if any) revenues. I unpacked historical data to assume Ohm was at the $400k-$500k per quarter as of previous 4C, and it would appear that the market had too. Clearly wrong. Indeed, not even close to correct. However, we now have a better idea, at the time of some blood letting.

I am not overly concerned that there is a need for a course correct. It is not the first one they have done on Ohm and it won’t be the last. But that is perfectly normal in any context, let alone the BUD context where it was a reactive entry into a rapidly developing/evolving area, that showed significant potential, by people with no direct experience. I am also somewhat comforted by BUD being forced back into its box which is on the software side rather the hardware side. Not saying they have this side sorted (as clearly they don’t in the case of Energy analysis and reporting), but I am saying this is where they can make a difference if they leverage with the right hardware partners. The Thor relationship should be ample proof of that. So for me, a good reminder that hubris and intent don’t deliver revenue if not backed up by a genuine value proposition that they can actually execute on. The real hope here is the building of a strong recurring revenue business.

I am disappointed in the usefulness of management guidance and insight sharing to date, as the narrative seems to be less focused on providing shareholders with an accurate insight into the evolving state of play, and more focused on providing a promotional synopsis of the company’s aspiration. Gimmicky and showy narrative with limited detail or parsimony with the insight providing data tends to (in my experience) attract the type of investor base that has no tolerance or understanding of the realities and vagaries of execution. And hence are poor backers when course corrections are required. But that is the bed that DM has made for himself.

However, many didn’t invest solely on the basis of DMs hype and expected more than just cheerleading. I am hopeful that we are transitioning to a better style of communicating and that we see warts as well as roses. That said, I don’t want or expect a publicly listed company to publicly confess and articulate its lessons learned, as it never pays to bleed when you swim with sharks. Wizened investors can read it for what it is (with hopefully limited cognitive bias), readjust investment strategy and act accordingly. Of course it helps if hyperventilating can be put aside. My first pass at it tells me that as a side bet within my portfolio, and within strike of my average cost, it is worth holding for at least the next 12 months. By year end we should see if the business is self sustaining in each of its parts; showing revenue growth in LiFX as per guidance; and addressing the reorientation of Ohm capabilities, positioning and pricing. If it is (on all three front) then it may become a “buy” for me. If not then clearly a “sell”.

All IMO and not investment advice. Just ventilating my inner thoughts as this unfolds. DYOR and GLTA.