Q2: 190% Revenue Growth w Positive EBITDA & Cashflow…edited7 months after the close of the Tourbuzz acquisition Urbanimmersive just put up a positive EBITDA and Cashflow Quarter in the MIDDLE OF WINTER!!!
Cost are being pulled out of the business and things are looking bright leading into the summer selling season.
Lets Dig;
Revenue & Gross Merchant Volume
Core Gross Merchant Volume increased 312% YoY which resulted in 190% Revenue growth YoY which gives you a figure of Revenue as a % of GMV of 53%.
Couple things here,
Gross Merchant Volume – The business can be broken down into two distinct halves. Winter (Q1/Q2) and Spring/Summer selling season in real estate (Q3/Q4). With 1H running at a GMV pace of 2.2 -2.3m GMV/Quarter and look for the back half of the fiscal year for GMV to accelerate to 1M GMV/month pace. With May going to put up the first 1M GMV month in company history.
IMPACT: With the back half of the year running at a 35 – 40% higher clip then the first half when they were already breakeven on profitability all that incremental revenue will flow right down to the bottom line. Operational Leverage at its finest.
Revenue Growth – This will be a less impart figure going forward as they switch the way they do the invoicing which will reduce revenue growth but will increase margins you can start to see it in the QoQ numbers.
IMPACT: Another example how they are streamlining the business which bodes well on a go forward basis it will be more about watching gross profit dollar growth, but tripling revenues I will take it.
Revenue as a % of GMV – Continues to run in that 50 – 60% range so we can use this figure to model out future revenue growth. However, with the revenue recognition changes might run a little lower closer to a 45 – 55% range but the trade off will be an expansion in gross margin.
IMPACT: Using the real time data you can see how the business is accelerating with the next 6 months running closer to a 3M GMV quarterly pace. 1.5 – 2.0M revenue pace with a gross margin closer to a 55 – 60% figure you are going to be growing gross profit dollars to take down the income statement.
Profitability & Cashflow
Operating Cashflow of $77,826 up from a loss $(291,155) last year and EBITDA of $157,362. Just two full Qs post Tourbuzz acquisition putting up these positive metrics is quite impressive.
When the Tourbuzz acquisition was closed in September (Stock of 0.125/share) and you could of known they would be EBITDA & Cashflow positive 2 Qs later would you of thought the stock would be higher/lower. I would of said higher… yet I was buying the stock yesterday at 0.07/share at over a 40% discount – cheap cheap cheap.
Scary thing, I think there is still a lot of cash costs to take out of the operating model. Take the first 2 Qs for example. Costs of Sales & Opex Costs (on a cash basis) in Q1 were $1,395126 relative to Q2 were $1,062,023 or a 25% cash reduction in costs!!! – most impressive stat in the Q.
Take for example in 2H of Fiscal ’19 the severance costs for Tourbuzz employees rolls off and change in invoicing you have a lean cash operating model that now could be at a run rate <$1M/quarter. So that 35 – 40% increase in GMV and resulting revenues will flow right down the income statement – OPERATING LEVERAGE!!!
Looking Out Next 2 Qs
This is when we are going to see the business really start to accelerate in its seasonally strong months.
Projecting out, I can paint a picture where GMV runs 1M/month for the next 6 month period with a conversion rate of 50% as a percentage of Revenue gets me to $3M in revenue with a stronger gross margin of 60%.
So if we come back to the cash operating model running at a pace of $(1)M/Quarter that leaves $1M in EBITDA for the back half of the year!!! – $1M in EBITDA in 6 months when the entire market cap of the company is 5M… too cheap.
The US 10 yr yield is 2.23% as I speak, if that is not bullish for housing I don’t know what is – keep in mind, there is a large US component to the revenue mix of Urbanimmersive especially with the Tourbuzz acquisition.
This one name has the greatest risk reward setups on the venture right now, especially as you can watch the GMV on a daily basis to confirm your investment thesis.
CEO making a presentation tonight, I strongly suggest attending if you are in the Montreal area. I think its just eyeballs that have to come back to this name because they have a good story to tell when nobody is looking. Could get a nice move to close the week.
Close your eyes and buy it <0.10/share. Won’t take much for it to move once it gets going.
LONG