from the AGM today... Overall a very good AGM; lots of positives and few negatives, other than stock price concerns.
Stock holders: the main reason for the fall off in share price over the past few weeks had to do with a fund block that had to unload as it changed mandate from tech fund to resource fund. David was firm in his comment about “had we known they were to do this we would have introduced them to potential groups that want to own sizeable blocks”. He referred to some US based institutions that want a piece of VQS but in a block form….. good news re: interest in ownership.
On revenue…. Talked about the fact that while most “sales” are front loaded, they should receive the same amount of revenue over the course of the contract in the form of services and upgrades. So if a deal is struck for say $2 million with a country court system , expect an additional $2 million over the course of the next few years, for a total value of $4mil.
So what’s been happening with these deals they have been getting lately is the hit in increased revenue immediately, but they add to a larger re-curring revenue base…which keeps growing.
Margins are still a very healthy 65% to 90%.... and getting higher as their cost base is marginal now, having done much R&D in the recent years. So scaling up should really see some nice bottom line lift.
They have hired some more sales staff and continue to add third-party sellers like CISCO, etc… interest is picking up.
Deals and sales pipeline…. They have about 127 deals in the works…. Bidding on about 25 deals now, that should produce about $10mil in revenue over the next while…. Assuming a 35% closing ratio which is the company’s norm.
Biggest fear…. One of the majors (CSCO, ALTOS, etc.) want to dominate this market…. To do this they will buy a player like VQS…
Potential take-over…. David quite clearly sad that he gets calls for large players to buy them out…. But he along with the board and major shareholders (Tera, etc.) will not walk this path until much much higher valuation levels…. He didn’t say what price (nor could he) but did reiterate “much higher levels”.
happy sailing, gang. This was quite positive in my opinion.
pm