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ePlus inc C.PLUS


Primary Symbol: PLUS

ePlus inc. is a provider of technology solutions across the spectrum spanning security, cloud, data center, networking, collaboration, artificial intelligence, and emerging solutions. The Company’s segments include Product, Professional Services, Managed Services, and Financing. The Product segment includes sales of information technology (IT) products, third-party software, and third-party maintenance, software assurance, and other third-party services. The Professional services segment includes its advanced professional services, staff augmentation, project management services, cloud consulting services and security services. The Managed services segment includes its advanced managed services, service desk, storage-as-a-service, cloud hosted services, cloud managed services and managed security services. The Financing segment consists of the financing of IT equipment, software, and related services to commercial enterprises, state and local governments, and government contractors.


NDAQ:PLUS - Post by User

Comment by Leafs4Lifeon Dec 04, 2019 1:21pm
195 Views
Post# 30421652

RE:RE:RE:Results

RE:RE:RE:Results
HandyAfterall wrote: Did you have a chance to listen to the conference call?  Mind sharing what you heard?

thanks,
handy



I read a transcript of the call yesterday. Results were actually a bit better than they appear but still mixed, in my opinion. 

FIrst couple of data points to update: The CEO said Plus is now in 370 licensed dispensaries in California (up from 350) and 30 dispensaries in Nevada (up from 10). He mentioned that there were around 500 licenses issued in California but only about 415 of those shops were operational at this time. More will open as the licensed dispensary owners build out their facilities ect and as more dispensary liscenses get issued. 

The above suggests that Plus should see some growth in California in Q4, which is good because if you just looked at the top line it would appear that revenue was flat QvQ. That is true if you look at gross revenue which came in around 3.5m but the net revenue was approximately 3.9 million. The difference can be found because of around 400k of promotional products associated with the roll out of the new mint product. It's unclear how many of those discounted units would have been sold without the discount - but on a gross basis there was growth at the top line. 

The headline loss of 11m was a lot. Over 9m in the quarter was associated with operations, 3.5m of which was a one time cost associated with the ramp up for Nevada and nationwide CBD. I expect operating expenses to be somewhere in the neighbourhood of 6 million per quarter going forward. My guess is Plus will do just under 5m in revenue for Q4 with gross margins around 20% for a net loss of something just north of 4m. If they do not expand to new states and do not grow revenue, that leaves them with around 5 quarters of cash. If they do expand their footprint their cash will burn more quickly but they will also ramp revenue more quickly. 

Overall, I think the next 3 quarters are vital for Plus products. They need to show strong revenue growth in Q4 and Q12020 in order to prove to investors that they have a roadmap to profitability in their existing addressable markets. If they do that the share price shoud improve, allowing management to access capital markets to fund further growth. 

Canaccord put out new research on Plus after the quarter ended which lowered their price target to $4 from $7. They lowered the revenue outlook from 70m in 2020 to 45m. Using a roungh guide, Cannaccord is giving Plus $1 of share price for every 10m in gross revenue they produce in 2020.

That's all I got off the top of my head, if I remember anything else I will post it here later. 
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