RE:RE:RE:i finally have figured out why run rate 2m in Dec 2021 With respect, I can't see any way the gross margin for Reliq's SaaS will be anywhere close to 90%. Here's my reasoning:
- As mentioned before, Reliq's SaaS isn't like other company's SaaS. Reliq needs significant staffing resources because it helps with patient onboarding, telephones patients to remind them to take their readings when necessary, deals with client issues, calculates and provides client-to-CMS billings, etc., so there's much more administration than a typical software company offering a self serve platform.
- Pretty much each and every news release dealing with software services refers to $x/month at 75% gross margin. Since the exact amount of hardware to be supplied would be unknown when each contract is signed, since hardware revenue is only recorded one time for each patient (never spread out) and since the 75% figure is stated even for contracts where devices are unlikely to be used, it seems to me Reliq is only referring to ongoing SaaS gross margin in its news releases.
- When the company's fiscal Q3 gross margin dropped, the company said this: "The slight decrease in gross margin during this period was due to a temporary increase in device costs, which has subsequently been resolved as the company identified new device suppliers. Gross margins are expected to return to the target of 75 per cent in the second half of calendar year 2022, due to reduced device costs and an increase in the percentage of the company's total revenues from higher-margin software and services, versus hardware". Think about that. They are saying that, as hardware becomes less of a factor, their gross margin should return to 75%.
It's ok if we disagree.
mingzhu wrote: Thank you for the clarification. i think 75% margin is not software margin but the combination of soft and hardware. RHT has achieved 72% margin for combined revenue of sott and hardware in previous Q. If i put 75% for software margin in my equation for last Q, the hardware would be 59% margin which is too high for hardware sale, and CEO mentioned this Q hardware margin was too low, and she would change supplier. So if i put 75% for software, hardware would be even higher next Q. math is wonderful thing and very objective. In the equation all numbers are related, to change one number, another number has to change too. 90% software margin is very reasonable estimate
theinvestor22 wrote: Good morning mingzhu. As you know, the company didn't split out SaaS revenue for fiscal Q1 of 2022, but it can be calculated another way. If you go to the fiscal Q2 2022 (31 Dec 2021) income statement, you'll find that 6 month services revenue was $888,431. Deduct from that the 3 month services revenue of $524,547 and, voila, you get $363,884 for Q1 SaaS, which nicely rounds to $364k.
I like your thinking about patient onboarding, compliance and revenue recognition. Quite insightful. Just one caution, though. While it might be reasonable to apply this approach to the upcoming quarter or two, covid might have played a big part in the slow ramp, so the underlying conditions might change going forward.
Just one small other point. As I recall, one of your prior calculations used a 90% gross margin for the company's SaaS revenue. Since Reliq's SaaS isn't the same as many other types of SaaS (think call centre, patient eligibility, billing, etc. involvement), I would think the gross margin should be lower. The company says in pretty much every news release they expect a 75% gross margin, so I think we should go with that. If I've recalled this incorrectly, please feel free to ignore this paragraph.
Have a great rest of weekend!
mingzhu wrote: with 40k patients resulted only in $1m SaaS revenue in Q1 2022. First, 3 months revenue delay, second, it took 6 months for new boarded patients to comply from 0 to 60%, 12 months to 80%, and 90% thereafter. That means those 40k patients only be fully billable 90% in Q1 2023, not 2022. CEO did not exagerate the run rate and 40k patients on board.
Here are my revenue calculations based on compliance rate from 0 to 90% in comparison with real reported SaaS revenue in the past 3 Qs :
reported revenue: 364k(?) 525k 1,067k
My calcualtions : 265k 580k 966k
I put ? on the 364k because i did not see 1.6m revenue breakdown of soft and hardware in that Q report. I took it from Investor22 number. Investor22 may has to check the number again or give the source. People can see my calculations are really close to real numbers. Therefor I am so confident my estimated SaaS 1.9m revenue is very close to real number in incoming report. As for the 3.1m hardware revenue, it may be overstated a little because i presume every new patient needs a device, but that is not true. play on n safe side, the total revenue should be in the range $ 4m to $5.1m.