RE:RE:RE:RE:RE:RE:RE:RE:RE:We Need To Know About The Financingdigitel wrote: Demand has barely arrived. It was only $400,000 more in revenue than the previous quarter and it caused 53% collapse in the gross margin percentage. At what level of revenue were they able to deliver efficiently during the quarter given the collapse in margin percentage?
- Demand has certainly arrived given the disclosed 50,000-unit figure which includes devices delivered to date and in the backlog. I estimate they've only delivered 10,000-units up until Q3.
- They explained the GM decline. It's due to the costs associated with overnight shipping. It's an explanation that makes perfect sense. If your hardware margins are ~25% on average on a $60 unit, and you pay let's say $10 for overnight shipping, then you're obviously making very little margin. - Not to mention the obvious fact that H/W sales will overtake recurring sales in the short-term as they deliver more units. Eventually, when the # of units deployed is large enough, the very high-margin recurring sales will overtake the H/W sales. digitel wrote: They tried to dismiss it as a minor decrease in gross profit. Is that being forthright? Does that raise a credibility issue? That was a major change in gross profit, in my opinion. I wish they would have guided to the 40% margin percentage of the previous quarter. If they are this sensitive to changes in demand it can be a burden for a business with high demand and need to fulfill orders rapidly.
- I think they phrased it the way they did because they know it's a problem that will be refectified when they have their inventory built up again, i.e. after the raise. digitel wrote: The best thing is insiders appear to want a part of the placement with strategic investors. Hopefully it is all resolvable and they are better at executing in the future. This quarter appears an outlier though the market sure has punished the stock.
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