Real strong Q4 numbers were released today with no underlying stock volume… so it’s up to me again to play investors relation department for TRAK.V because this remains my favourite long term secular growth story that has been totally ignored by the market other than the one analyst who covers the name with a 1.50 PT which equates to 150% upside. Here’s my take on today’s numbers;
 

Revenue
 
Revenue up 99% YoY but more importantly you are seeing a continued acceleration in underlying quarterly and monthly reoccuring revenue with subscription sales up 38% YoY and MRR for Dec ’17 up 42% YoY.
 
Diving deeper into subscription sales you are seeing continued acceleration in underlying growth (Q4: 37.5%, Q3: 24.5%, Q2:12.4%, Q1:5.3%). Accompanying this acceleration in growth in MRR you are seeing margin expansion, with Q4 gross margin on sub sales of 74% relative to Fiscal ‘17 gross margin on sub sales of 67%. So you continue to see acceleration in top line revenue and core profitability of its business as it scales.
 
*NOTE: all of this revenue growth was before the regulatory impact of enforced ELD in the US as of Jan 1 ’18 which will lead to a growth profile that is unmatched in any end market with an entre industry that is being forced into technological development.
 

Capital Structure
 
With 2M in Cash on the balance sheet and 4.5M credit facility signed in ’18 you they are well cashed up so you should not see a dilutive equity deal any time soon.
 
Management is right there with pre-existing shareholders including myself, with 2.5M in options with a avg strike price of 1.34/share that leaves the stock needing to more than double before any of these options even come into play. Combine that with the remaining 1M in warrants that are still outstanding with a strike price of 1.20/share leaving no excess liquidity on the sell side creating a large air pocket to the upside, as the stock has gone down from 0.90 to 0.60 on no volume… just look at OBV indicator.  
 
Insiders were purchasing shares at the end of last year at the 0.90/share level and the underlying business has done nothing but accelerate since then so its time for them to step up and buy in the open market down at this level.
 
Feel free to contact me if you disagree.
 

KPI’s
 
All indicators continue to strengthen, pointing to continued signs of acceleration.
-          ARPU 25.76 up 10.5% YoY
-          Subscribers 15,545 up 28.42% YoY
-          Monthly Recurring Revenue up 41.7% YoY
-          Churn Rate Improvement down to 7% form 10%
-          Enterprise Client Base up to 43% of Total Subscribers
 
What else could you possible want….
 
 
Valuation
 
Using a 5x1 Valuation (5x Recurring and 1x Hardware) gets me to a target price on next years numbers of 1.80/share or 200% upside when I use a 30M share count figure.  
 
Single greatest buying opportunity in small cap tech in my opinion, especially given strategic relationships. Look at the ridiculously high valuation of a $BLN.V… they must be taking a look from an acquisition point of view. Don’t discount the strategic partnership with $MTL.TO they were able to write off $400K of remaining payable on intangibles acquisition because they are developing a superior product with $MTL.TO to the one they acquired in 2016. Their channel relationships from Honeywell, Microsoft, Bell, Telus, etc. are way too valuable and can’t be overlooked.
 
 

LONG