I'm guessing the Big Tuna is saying that the annual customer receipts will be at least $15m at year end June 30 (I personally think we can expect them to be in excess of $15 million). He is pointing out that ARR at the beginning of the year was around $15 m. Thus if ARR is $40m in June 2018, Tuna would expect revenues of at least $40 million for the following year (again, I suspect it will be better than this)
FWIW, I dont think one needs mythical powers to estimate customer receipts. You have the customer revenue for quarter ended June 2018. You have the ARR gains for each quarter subsequent to then. You can assume that the gains in ARR are a mix of quarterly payment contracts and annual payment contracts and that the payments will usually flow in cash receipts 3-4 months after the contract (set up time and payment terms of 30-45 days) . Revenues track this metric very closely (with a little kicker from negative churn). June's quarter from a revenue perspective has been in the bag since the end of September. In June we will get an idea of what the September and December quarter is going to look like. Tuna's approach keeps it simple and conservative but his point is valid.... ARR provides some level of transparency for future revenue (whether you use a sophisticated model or Tuna's back of the envelope)
Government grants are real cash flow and not to be ignored. I look at them as part of the cost equation. When LVT set up the new sales facility in Rochester NY, their business plan included the NY state grants. Their real operating costs and acquisition costs are = Fee to N3 - Grant from NYS. Since the N3 costs are paid up front and the NYS grants lag by at least 18-24 months, the cash costs are overstated until the grants arrive. Based on typical NYS business grants, that should be sometime in the September Q but I actually have no idea how much is due (note to self - sloppy research- must do better)
LVT Price at posting:
45.0¢ Sentiment: Buy Disclosure: Held
(20min delay)