RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Q1 FY2015 Valuation Updatelogical_thought wrote: @nkbourbaki,
you our make some fair points, although receivables were down $600,000 in the most recent quarter vs.the previous one. I also think that an EV of 1x revenue prices in a lot of "hair" for a 67% gross margin company. Another way to look at it would be if $1 million a year were eliminated via the CEO & CFO comp and cost of being public (not to mention the VP of Sales and perhaps marketing if there were a strategic buyer) then at 65 cents a share the company would be selling for only around 6x post-acquisition EBITDA. If you can find me another revenue-stable 67% gross margin company in the world at that price I'll buy it this week.
Q1 receivables should be down substantially from Q4 because Q4 has much higher sales and ends up being weighted to end of quarter. (By memory, this happens every year.) I'm talking specifically about over-30 and over-90 days numbers.
I also have a less optimistic view of the margins and the revenue stability. They capitalize a bunch of development expense. It's straight from the accounting playbook, but it does make the bottom line look a little rosier than it is. And remember they've been putting a *lot* of effort into sales. So the glass-is-half-full view is that revenue is stable; the other view is that their running to stand still.
I take a more skeptical approach simply because we all know that the legacy revenue will NOT be stable going forward. Every potential acquiror knows this and will discount cash flows accordingly.
But again... it's really cheap, damnit!