Another argument that seems to inspire the critics is that the company doesn't name all their new customers when they report increased backlog and customers. Here a few pointers:
So why is there such a discrepancy between the 36 month backlog ($800M) and the revenue (2018: $32.4M)?
But this gives great visibility! (see here).
- The auditor just vouched for their financial results (despite being critical of their control systems, see the first entry in this thread). This should include the backlog, which is based on these new contract wins.
- What else can explain the 101% organic revenue growth but converting backlog (which comes from these new contracts)?
- It isn't unusual for companies not naming their customers (see below).
- The Artilium and iPass acquisitions were largely (and even completely, as in the case of iPass) paid for by Pareteum shares. Would the people of the acquired companies really have accepted these if they had doubts about the validity of Pareteum's contracts? Would they even wanted to be acquired at all by a supposedly dodgy company?? Keep in mind both of these acquired companies had strategic cooperation agreements with Pareteum before they were acquired. They knew how the company was operating and often went after prospects together.
- We do know at least some of their customers. Vodafone is still responsible for 40% of their revenues and has been instrumental in developing and marketing Pareteum's Global Mobility Cloud Platform. Deutsche Telecom is a customer of iPass.
- Would Jean-Paul Menke, non-executive director of Artilium which was acquired by Pareteum in Q3 last year, buy 12M shares as CEO of a Swiss wealth managing firm Hoving Partners knowing these contracts are dud?
- Management argues they don't publish the names of many customers for competitive reasons and avoid poaching.
Quote:So, let's hit those first. Understand that in almost all of our agreements and contracts we have NDA, nondisclosure agreements that prohibit us from disclosing the fact that we have an agreement without prior permission. Why do we agree to that? Well really, why not. We work and supply services to our customer, and our customer should be able to disclose whatever they wish to their customers without CoreCard interference. In some cases, our customers find it advantageous to disclose fully or partially that CoreCard is their vendor. In other cases, it's a well kept secret. And in many cases our customer may say to us, do not publicly or in writing disclose that it's okay to use our name in talking to prospective customers. So, unlike some of our competitors, we don't put our press releases or announce new contracts other than where pretty much required in our filings or shareholder communications.
So why is there such a discrepancy between the 36 month backlog ($800M) and the revenue (2018: $32.4M)?
- Backlog itself increased tremendously, from $147M at the end of 2017 to $615M at the end of 2018 to $800 (including iPass) in mid-March 2019.
- It takes between 90 and 180 days between contract win and deployment
- The contracts are heavily back-loaded, with just 15% of contract value generated in the first year, on average.
But this gives great visibility! (see here).