RE: hi17 Jun 2010 10:56
In next 6 months...
SYNC are awaiting confirmation of a large contract that was signed (and revenue booked) in 2009, with an operator who subsequently couldn't finish the deal as they themselves were subject to / caught up in a takeover bid. That has now been completed (Zain/Bharti Airtel... possible foot in the door with India if SYNC deal is concluded!!) and Sync exepect this contract to be completed - and this revenue booked in 2010. This missing revenue for 2009 was the reason SYNC missed their targets by 30%... which sent the s/p tumbling. Still, there were alot of positives to come out of 2009 - 13 new contracts etc. 7/8 this year to date. MG revenues up 175% y/o/y for second year in a row - and no reason to suspect that's slowing down.
The thing is, it takes a while for the contracts to start generating revenue... SYNC have got to customise the s/w for the customer, the customers got to get a marketing campaign going, they've got to test and load test the system... then get a trial going... then deploy it. Not a quick process!! However, even a small contract with SYNC represents a significant investment by that operator in the software. Customising the software for the customer costs the customer $80-$120K alone in professional services from SYNC. So, even a (paltry) 50,000 user license might be bought initially... for a network with 20/30 million subscribers - which disguises the revenue that will eventually be generated by that contract a little way down the line.
SYNC are also in detailed / final negotiations with 10 operators, some of the deals are understood to be of significant value (Message Phone orders, New Operator Deals etc.) any or all of which could sign between now and end of year (end Dec). Sync have a good track record in this area, and telco's do a lot of their business between July-Dec.
Other handset operators are also beginning to show interest in bundling MG with their handsets.
On a conservative look at the numbers of expected/registered users, even if SYNC miss target this year by 30% they should still come out with £1-£2 million profit... (Myosotis is better on the numbers than me)... but even breakeven should demonstrate the dramatic growth in user take up due to recurring MG revenue alone. 175% y/o/y growth is incredible... like Moores Law!... and should bring about an appropriate correction in S/P.
We have all been waiting for news of Expansion Orders from customers... a customer will initially purchase a block of licenses... and when they use them up they order more. We've been waiting with baited breath for news of these expansion orders... but have discovered by talking to the COO that if an expansion order was received, even if it was significant in value, that required no change in the scope of services.... and provided it would not have a material effect on the share price - then it would not necessarily necessitate the release of an RNS (phew)!
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