RE:Good Q2 Report...Return of growth and profitability...cash of $0.23/share no debt New management and vigorous tweaking of the business model to eliminate low margin inventory is now beginning to show up in WEW's financials.
The turnaround began in Q1/12 and in this quarter we saw a strengthening of this trend.
Main points................
...................revenues grew to $8.1 million from $7.2 million
..................net income of $1 million or 1 cent per share vs a loss of $0.8 million
.................adjusted Ebitda of $1.1 million vs $0.2million
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Hardware revenues for the three and six months ended June 30, 2013 increased 26% and 16%, respectively, over the prior comparable periods.
............Service and other revenues also improved, increasing 79% for the three months ended June 30, 2013 as compared to the prior comparable period, largely due to the completion of a custom reporting project for a government customer and certain other one time revenues. ...................
Recurring revenues were up 2% to 57 % of revenue
........ The Company has replaced the lost subscription revenue from the planned exit of the theft recovery vertical with new, higher ARPU subscribers from sales and implementations over the past twelve months across the Quadrant and InterFleet product lines. The Company's shift away from hardware to a majority of subscription, software and services revenue continues to reflect management's focus on developing the Software as a Service ("SaaS") model
..................Gross margin increased to 61 % from 57 %
........cash increased to $21.3 million from $4.5 million at end of Dec/12 and up $0.2 million over Q1/13
.....no debt and WC now in excess of $27 million
The focus on the highest margin most sophisticated client solutions is continuing to pay off, and a scalable cost base and business model which will allow WEW to continue to produce positive results The sales groups are focused on the right verticals with the right products to produce a superior return on the investment.
Going forward, ressults will continue to improve as the full business model gets fully implemented.
I foresee WEW earning between 6 cents to 8 cents over the next 4 quarters and, with $0.23/share in cash and no debt, and with rapidly developing growth profile, fair value should be above $1 per share.
An accretive acquisition would boost that fair value..