Mikeyf,
Thanks for the reply.
["What you suggest by saying the numbers are "inflated" is that there is a wholesale corruption at play by upper management to manipulate the numbers to deceive the investor. And by the nature of how backlog works to drive invoicing, this corruption would leak into the GAAP numbers "]
No, I'm not suggesting that. What is difficult to refute is:
1) We know very few of companies that comprise their backlog. Of the few we know, quite a number turn out to be dodgy and really difficult to assume they signed up for multi-million dollar contracts (or if they did, it's difficult to assume they will actually deliver). I have no idea how representative this is, but it's not exactly reassuring.
2) Backlog exploded, but revenue guidance has been lowered significantly. How is that even possible if there is nothing wrong with backlog. The AVG presentation contained $84M in 2019 backlog (not including the acquisitions and not surprisingly, the last time they split that out per year and it should certainly be significantly higher now) and the iPass acquisition presentation contained $144M in 2019 revenue guidance (including the acquisitions). Now they guide for $105M-$115M in 2019 revenue.
That really is odd. That $84M 2019 backlog at the time of the AVG should be well over $100M today, yet Pareteum (without the acquisitions) guides less than half that now. How has that happened? Management argues only 75%-80% conversion, but given the unearthing of dodgy customers, I'm not at all sure what that actually means and the conversion rate seems way lower (unless they massively beat their own revenue guidance, something which I specifically acknowledge as a possibility).
["Are you in denial of the fact that this sector is rapidly growing and subscriber numbers are growing?"
No, I specifically stated that in several articles, including the one you argue is a bear thesis.
["I put this example in front of you as a consideration to your conspiracy theory that the executives are manipulating backlog numbers. I joined this forum for good due diligence and I get this instead."]
It isn't a conspiracy theory. I put forward two elements that made me reconsider the bull case (I thought previously double digit share price was a slam dunk, now I'm not so sure of that anymore), dodgy clients and the odd combination of exploding backlog but declining revenue guidance. I think both are real, as there is evidence supporting both. People can just simply chose to ignore that and accuse me of conspiracy theories, etc. but I find there is hard evidence of things not being as rosy.
Thanks for the reply.
["What you suggest by saying the numbers are "inflated" is that there is a wholesale corruption at play by upper management to manipulate the numbers to deceive the investor. And by the nature of how backlog works to drive invoicing, this corruption would leak into the GAAP numbers "]
No, I'm not suggesting that. What is difficult to refute is:
1) We know very few of companies that comprise their backlog. Of the few we know, quite a number turn out to be dodgy and really difficult to assume they signed up for multi-million dollar contracts (or if they did, it's difficult to assume they will actually deliver). I have no idea how representative this is, but it's not exactly reassuring.
2) Backlog exploded, but revenue guidance has been lowered significantly. How is that even possible if there is nothing wrong with backlog. The AVG presentation contained $84M in 2019 backlog (not including the acquisitions and not surprisingly, the last time they split that out per year and it should certainly be significantly higher now) and the iPass acquisition presentation contained $144M in 2019 revenue guidance (including the acquisitions). Now they guide for $105M-$115M in 2019 revenue.
That really is odd. That $84M 2019 backlog at the time of the AVG should be well over $100M today, yet Pareteum (without the acquisitions) guides less than half that now. How has that happened? Management argues only 75%-80% conversion, but given the unearthing of dodgy customers, I'm not at all sure what that actually means and the conversion rate seems way lower (unless they massively beat their own revenue guidance, something which I specifically acknowledge as a possibility).
["Are you in denial of the fact that this sector is rapidly growing and subscriber numbers are growing?"
No, I specifically stated that in several articles, including the one you argue is a bear thesis.
["I put this example in front of you as a consideration to your conspiracy theory that the executives are manipulating backlog numbers. I joined this forum for good due diligence and I get this instead."]
It isn't a conspiracy theory. I put forward two elements that made me reconsider the bull case (I thought previously double digit share price was a slam dunk, now I'm not so sure of that anymore), dodgy clients and the odd combination of exploding backlog but declining revenue guidance. I think both are real, as there is evidence supporting both. People can just simply chose to ignore that and accuse me of conspiracy theories, etc. but I find there is hard evidence of things not being as rosy.