While we believe that Pareteum's business model has considerable operational leverage, and stuff like adjusted EBITDA has improved a lot, this isn't yet an earnings story:

• The market is still in the very first innings in the move from on-premise to the cloud, so there is a bit of a land grab going on.
• Look at bigger brother Twilio (TWLO), it's hardly profitable either. That hasn't prevented the shares from exploding.
• With the coming impuls from 5G to the IoT market, the market Pareteum serves is going to become much bigger.

In any case, the last two quarters the company actually produced small positive earnings. It's not like they're bleeding losses.

From the 2017 year- end report:

Our value proposition intersects with numerous applications and industries. It is our strong belief that no other company in the Communications-as-a-Service market offers similarly broad value in such a comprehensive way. An easily accessible open mobility system for the world is difficult to get started because it requires a “network effect”. The network effect is an observable condition that yields increased value to the “new easily accessible open mobility system for the world”, and all users of the system as more users come on board. The essence of this point is that every communication – a transaction – requires both a sender and recipient who are willing to access and use the new system. We aim to provide the marketplace exchange on which these transactions take place, and will attract new users.

That is, we're still in the land grab phase, creating connections and network effects..

And, as a reminder (in red):

12/20 Pareteum initiated at Northland  Pareteum initiated with an Outperform at Northland. Northland analyst Michael Latimore initiated Pareteum with an Outperform rating and $7.50 price target, stating that mobile virtual network operators, or MVNOs, are increasingly looking to SaaS platforms, such as from Pareteum, to replace on-premises software. He believes 90% of the addressable market is still served by legacy on-premises software today, Latimore noted, adding that the company's "highly experienced management team" has orchestrated a material turnaround.

Breaking News: TEUM latest news. - The Fly

That is, it's very early days in the market still..

Here is something to consider, from the Q3CC:

Revenue per employee is $492,000 at the end of the third quarter, an increase of over $277,000 from the same quarter last year. This does not yet include the impact of the Artilium acquisition. We expect to continue to exceed the expected industry average for average -- annualized average revenue employee per year, and on that basis, on a pro forma basis, our revenue per employee, including Artilium acquisition is roughly $359,000 per employee, and again, the benchmark for our industry would be in the low 200,000s.

This shows a large amount of operational leverage, although that picture is a bit blurred by the acquisitions. We won't go as far as to say that it's a matter of hooking the customers up (out of backlog) and then leaning back and collecting the rent (recurring revenues), but it's not that far off..