05-08-2019, 02:10 PM
Some notable points, we'll keep adding:
- Revenues $23M, that is $5M from iPass (half a quarter) and under $3.5M for Artilium, so that's a pretty hefty growth for core Pareteum which did less than $10M in the last quarter and now more than $14M.
- Somewhat curious though, they also argue sequential organic growth was 33%, it seems to be 40%+
- Backlog conversion was 101% but that's a 27 month average, implying a small decline but still well above the guided 75%-80%.
- This might have something to do with Turner's overall lesson "sell what can be deployed immediately and stop selling tailored or custom contracts." Or "configuration versus customization."
- They hope to profit from the latter later on by being able to charge for customization and speed it up.
- There is also a learning effect in geographical expansion.
- Conversion doesn't seem to hold them back and they've got the people they need, grosso modo. If true we will see operational margins and EBITDA margin expansion.
- Indeed, G&A is growing considerably slower than revenue, declining to 33% of revenues (from 56% last year), they expect this to continue.
- What is a barrier is market coverage, but rather than hiring more sales people, they're working on some channel strategies (no specifics provided).
- The end of Q1 cash balance was $10.7M, they paid $2M for Devicescape drew $25 from the Post Road loan and paid off the iPass loan ($13M or so, if I remember correctly).
- They acquired Devicescape, a strategic partner for iPass for $2M in cash and another $2M in shares. It's a leader in 'virtual WiFi networking,' opening up all sorts of location based advertising for customers.
- Given the backlog controversy, they stressed that others had done DD, like the acquired companies (as they were largely paid in shares) and the Post Road Group (which provided them with a $50M credit line).
- They now have 12M connections (subscribers, devices and their network usage).
- Of the identified $19M in cost synergies from the iPass acquisition, $14.5M have been achieved which made the acquisition accretive (just), net of transaction fees and restructuring charges.
- They listened to us (sort off)! Backlog is going to be announced only quarterly.
- The company converted way better than the 15%/30%/55% scheme as they converted and billed year one at 20%; we expected year two at 30%, we actually billed at 43%; we expected year three at 55%, we actually billed at 89%.
- They have over 1000 active customers (most of which come from the acquisitions).