Hi Woody, thanks for the comment. The only COGS they have are campaign infrastructure costs. The other expenses are counted as Opex (if I remember correctly).
right, but i'm asking why you are using their non GAAP numbers which exclude the campaign infrastructure costs to calculte their gross margins of 50-60%. if you add back in those costs it appears they are losing money or barely making money as stated on their GAAP 10k sec filings. is there a reason you are excluding them from the profit margin calculations? i assume there is thanks for the info!
i'm so sorry i'm an idiot i was reading their statement of calcuLation wrong i thought they were saying they werent accounting for campaign infrastructure costs when calculating margin, i'm so sorry for the bother. i was just trying to figure how they would become profitable and i assume its basically by top line growth to cover SG and A expenses. sorry again for being so careless in my reading. thank you !
Hi Sam, have you seen anything since your article was published that would materially change your investment thesis? I am surprised by how lukewarm the price action reaction to Nov 5 pre-announcement of Q3 results has been. The company inflected well to profitability on EBITDA level, and is now trailing on EV/EBITDA of around 6 when Q3 numbers are annualized (probably not a great idea due to seasonal effects, but it will serve as a crude proxy of where valuation is heading). P/Sales is now 1, which seems quite ridiculous for a company with the roster of clients it has and recurrent streams of income. I am basically just wondering if I am missing something that's brewing under the hood and not immediately visible, or whether market is simply in the pre-discovery slumber yet.
Q3 results were expected to be good. If they can keep up profitability in Q4 and show some more traction with Snipp Media, buying at these levels could prove a steal. Personally, I have a lot of other attractive opportunities with more momentum for the time being, so Snipp is on the back burner for me. I'm keeping a close eye on it, though. If I get the sense Media is picking up pace, I'll build up my currently small position again.
hey sam! thanks for the writeup! i'm curious, why are you calculating their gross margins according to what they say in their investor presentation is gross margin less campain infrastructure? with all expenses added back in they have negative or very low gross margin. is there something about 'campaign infrastructure' that is temporary and will no longer be part of COGS in the future? sorry if thats a dumb question thank you!
Hi Woody, thanks for the comment. The only COGS they have are campaign infrastructure costs. The other expenses are counted as Opex (if I remember correctly).
right, but i'm asking why you are using their non GAAP numbers which exclude the campaign infrastructure costs to calculte their gross margins of 50-60%. if you add back in those costs it appears they are losing money or barely making money as stated on their GAAP 10k sec filings. is there a reason you are excluding them from the profit margin calculations? i assume there is thanks for the info!
Apologies - I may be being dense. How are you suggesting I calculate gross margin?
This is how the company does it (and it makes sense):
Revenue - campaign infrastructure = gross profit
E.g. for Q2.
$4,753,273 (rev) - $1,721,506 (camp. infra.) = $3032 (gross profit at 64% margin)
I'm not sure how else you would do it. Please illustrate with some numbers for clarity.
i'm so sorry i'm an idiot i was reading their statement of calcuLation wrong i thought they were saying they werent accounting for campaign infrastructure costs when calculating margin, i'm so sorry for the bother. i was just trying to figure how they would become profitable and i assume its basically by top line growth to cover SG and A expenses. sorry again for being so careless in my reading. thank you !
No worries. Their P&L sheet is structured a bit unusually. They don't break out Gross Profits, which I think they should. Glad it's all clear now.
Hi Sam, have you seen anything since your article was published that would materially change your investment thesis? I am surprised by how lukewarm the price action reaction to Nov 5 pre-announcement of Q3 results has been. The company inflected well to profitability on EBITDA level, and is now trailing on EV/EBITDA of around 6 when Q3 numbers are annualized (probably not a great idea due to seasonal effects, but it will serve as a crude proxy of where valuation is heading). P/Sales is now 1, which seems quite ridiculous for a company with the roster of clients it has and recurrent streams of income. I am basically just wondering if I am missing something that's brewing under the hood and not immediately visible, or whether market is simply in the pre-discovery slumber yet.
Q3 results were expected to be good. If they can keep up profitability in Q4 and show some more traction with Snipp Media, buying at these levels could prove a steal. Personally, I have a lot of other attractive opportunities with more momentum for the time being, so Snipp is on the back burner for me. I'm keeping a close eye on it, though. If I get the sense Media is picking up pace, I'll build up my currently small position again.
hey sam! thanks for the writeup! i'm curious, why are you calculating their gross margins according to what they say in their investor presentation is gross margin less campain infrastructure? with all expenses added back in they have negative or very low gross margin. is there something about 'campaign infrastructure' that is temporary and will no longer be part of COGS in the future? sorry if thats a dumb question thank you!