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1. It ain't happened yet.
2. If it did and lasted 3 months (unlikely), it could cost SEE the equivalent of a Q of US auto revenue this year. If estimated worldwide expected Q4 revenue is around 4m, then US revenue might be 2.5m
So in worse case hardly a serious problem.
Lewbo,
Yes I get there are receivables to be taken into account here from end of accounting period. However I'd only expect that to be last month of year not Quarter, else they are offering ridiculously long payment terms.
So lets say 4000 were sold in June, that still leaves 20k.
That's still quite bullish.
Be interesting to know what their payment terms are.
Direct sales could even be up front, with resellers being longer clearly, and possibly needing to hold some stock for free until sold?
I'm surprised no one has commented on Paul's explanation of the cash position.
My understanding is the he said that we have 36m cash tied up in G2 Fleet unit inventories, which they expect to unwind by End of this year.
I see this as interesting for 2 reasons.
1. Tying up half your available cash in this way is not a decision taken lightly.
Doing the maths I calculate that this equates to about 24k units.
So they clearly believe they will sell the majority of these before the end of the year.
Given Fleet averages about 1000 a month, that is a big increase, and if wrong is a huge amount of working capital tied up needlessly.
They clearly believe strong Fleet sales are around the corner and have put their money where their mouth is.
Alternatively they believe/know G3 is further away than we have been led to believe, and will need more G2 inventory.
No idea which is the case. But probably a bit of each.
2 . When they originally stated that current cash status was misleading due to inventory build, I'd assumed that included 10m cash max. I wasn't expecting 36m.
As a result I'm more comfortable with the cash position going forward.
If they have got this wrong, they will have to hold back the release of G3, as they can't afford to have loads of G2 inventory become obsolete.
Lost,
I'd be more than happy waiting if we was breaking even and just waiting for growth to kick in. Trouble is based on your auto figures that's another 20m cash burnt in FY 24, and still not reached break even. Only 16m left going forward.
Things start to get pretty tight, just as G3 is launched and we need to buy loads of hardware inventory.
I worry Paul's, "what would we do with more money" quote may become the next "imminent" moment.
Glandore,
I think you have got it spot on.
I’m not particularly happy either, however for once I’m actually not unhappy.
I suspect that’s because after years of hype and subsequent growth at the low end of that, I’ve lowered expectations in all respects.
Fleet seems to be stuck at 1000 new connections a month, so I only expect those levels and that’s what we got again. Only the upgrades, which is a bit of a bonus, made it look as though we had some exceptional quarter for Fleet
For whatever reason installation of kit once purchased seems to take an age, and until something dramatic changes (like fitting after manufacture), I don’t see this changing, and 1000 a month will continue. The European directive seems to have had almost zero impact.
Auto was again slightly below my, much lowered expectations, however, as said many times the next 3 or 4 KPIs should demonstrate whether there really is a high growth business going to appear.
I think there still is, but it has taken much longer to establish than I hoped, when I first got involved here.
At 211K for the 4th Quarter, next year should deliver something along the lines of :-
211K * 4 if no growth = 844k
BMW reportedly in all models (2m+ a year) = 1m for 6 months if they start Jan 2024 as suggested. Let’s say 900K with a slow start up.
Full year of Mercedes 200K?? total guess on numbers but attempting to be conservative.
Continued growth of Ford, GM, etc, and Fisker start. Say another 170k.
Total 844k + 900k + 200K + 170K = 2,114,000 sales
Even at $11 a pop (again low estimate) that’s $23.25m revenue.
I’m personally hoping for 3m, but would be ok with the above. However next KPI will be very telling as I’d expect a 65k jump from 211k to 276k as a minimum if its going to happen.
I’m not expecting anything new from Paul on Proactive tomorrow, other than the usual hype.
Looking back at old RNSs, it looks as if there were at least 11k fleet vehicles on G1 and which will need an upgrade. Looks like about 7k have been done, so another 4k to go. Which at 500 dollars margin per unit is another 2m dollars profit, which should show in FY24. Couldn't come at a better time really.
I suspect this is where the revenue beat has come from.
Mike,
Take a look at today's Cenkos note.
https://www.cenkos.com/research-portal/#/portal/cenkos-securities.
You'll have to register but worth doing that for the See notes alone.
Can't cut and paste relevant section as not on pc currently.
The trouble is that 5700 of those were upgrades to existing customers, not new customers with new monitoring revenue. Aus Going 3G to 4G has been a bit of a windfall in that respect for us.
Customer must be a little cheesed off with this, knowing G 3 is coming at some point.
Boon,
Thanks for that, tucked away in notes at bottom which I missed. Would be nice if they had indicated how much extra working cap was used, which will later unwind.
Are we talking 2m or 10m. Once again left in dark.
Figures are pretty much as expected.
Fleet connections slightly disappointing, sold units slightly better.
Auto just under expectations, but next quarter is the key one.
Biggest concern is cash burn. Another 16m burnt in last 6 months and 36.8m left.
From having more than they need to getting a bit tight now.
Not sure how market will view this. Should still be ok if revenue we expect transpires, but market may not be prepared to be so sure.
The magna convertibles may be classed as liabilities now. But if they decide not to convert, it then becomes debt.
Depends on your personal risk assessment, as to whether you see it as a liability or debt.
Anyone assessing on worst case scenario, will treat it as debt.
Given GM had first user advantage, and got rave reviews, I'm shocked they have only used our software in 80,000 cars to date.
It helps explain why our broker forecast auto KPIs have been continually downgraded. Given the company would have expected much higher sales than this.
Hopefully they finally get their act together and add significantly to the big uptrend expected in 2024.
S2020,
I don’t disagree that BMW should result in $22m a year revenue from Jan 2024, assuming we are in all new cars. Whether that transpires remains to be seen but for now I’ll assume it’s the case.
However, don’t start using Paul’s quote that its 90% profit margin, and use that figure as pure profit, and then try to base a market cap and share price on that. That a gross operating figure that is meaningless whilst we are non-profitable.
Currently the company has yearly costs of about $65 to $70m.
Fleet currently produces about $25m revenue and Auto $8m. Licensing and NRE probably about $10m. So, after BMW adds $22m in 2024 we are still not producing any profit.
Using your prudent 13x profit calc, 13 X 0 is ZERO.
The 90% Auto margin figure only becomes very relevant once we generate enough revenue to cover costs ie breakeven. At that point it is truly 90% margin for any sales increase and it all drops to the bottom line. However, we are a way off from that currently, but profit growth should accelerate quickly from that point.
First, we need to break even, which we should just about do in 2024. However, for that to happen we need the following minimum steps to occur.
1. BMW start in Jan 2024 and we are in all cars.
2. Fleet continues to grow at similar rates, of 12,000 per year.
3. NRE from Collins is reasonably significant ($5m)
4. Other Auto sales grow to produce 3m units sold in FY year 2024. BMW should be 1.1m of that figure given they will have only done 6 months at that point.
Anything else is a bonus.
Clearly for now the risks to reaching profitability are all around Auto. We should finish 2023 doing about 640K cars a year, ramping that to 3m in 2024 is a challenge, but what the company are suggesting looking at graphs from presentations.
However to date the presentations have suggested x sales, and the reality has always been less due to delays etc. It would be nice to finally see the company outperform the numbers they suggest.
I’m not expecting that from this upcoming KPI, but going forward it would make a world of difference.
Mapl,
I heard Paul say at least twice when pushed that revenue is 10 dollars a unit, plus 1 dollar per additional feature required.
These are not guestimates, but facts.
The only guesstimate is the number of features required per model. Until I'm told different I'll assume one feature per model for now making 11 dollars.
Remember features are relatively new, so may become significant further down the line, but suspect current roll outs don't incorporate them significantly.
Menon not wrong?
According to him we were in BMW from 2020 earning 30 US dollars a unit.
The reality is starting in 2024 and be 11 dollars if lucky.I
This is the big problem with this share, everything takes 4 years longer to start deploying, and revenue gets squeezed.
Great products, but the segment they operate in is a nightmare for lead times.
The market has correctly twigged this, and only proof of revenue, and profitability will result in any share price change.