TECHNOLOGY INVESTOR CONFERENCE I read the investor presentation (April 15, 2021) provided with last Thursday's 30-minute Technology investor conference. Slide 27 provides a glimpse of UI potential revenue from its prop-tech business.
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The one matrix that investors should be watching is the average price per transaction and the number of transactions per year. For fiscal year 2020, the average price per transaction was ±CDN$11.50 and UI processed approximately 250,000 transactions (±250,000 X $11.50 = $2,875,000) which is roughly equal to the annual SAAS revenues posted for fiscal year 2020 of $2,846,605.
Since October UI started charging $10 per floor plan and $15 for hosting a website. If UI can increase the average price per transaction to $20, SAAS revenues would be $5,000,000. If UI can increase it to $25, SAAS revenues would be $6,250,000. That is were the short-term growth will come from.
UI has increased the number of clients, but fewer listing has reduced the number of transactions. Eventually, the residential real estate market will stabilize and when that happens, it would be reasonable to think UI's revenue will increase. According to the CFO, March 2021 was the best month in terms of the number of $40 transactions billed.
Second-quarter results are due in mid May, hopefully management will share with investors the number of transactions per quarter and the average price per transaction.
UiMEET3D is being offered for free. In the coming months, UI will begin charging a monthly fee of ±$30 plus an undisclosed amount of $0.0 per minutes. It is not clear who will be paying the monthly subscription. UI's clients are the photographers. So will photographers be the intermediate between UI and the real estate agents? Will photographers offer the paid subscriptions to real estate agents, keep a commission and reimburse UI?
The fourth quarter (July, August and September) could be a great quarter.
Licensing revenues varies from $4,680 to $12,000+ per year. Licensing revenues for the current fiscal year will be negligible. There is less than six months left in the fiscal year and so far only one licence deal has been signed.
Merger and acquisition.
The market likes it when a company buys other companies. UI has $3,500,000 on hands and has the ability to print money (shares). If UI can negotiate with the owner of a competitor who would love to be involved in a publicly traded company, then a deal can be worked out that will be beneficial to both sides.
Social media (club house), publicity and UiMEET3D
Left blank on purpose.
Market Valuation
Using a share price of $0.21, the market cap is $30,400,000 ($0.21 X 144,736,068 shares). Senior debt is $2,000,000 and cash available is $3,500,000. Trailing twelve months operating cash flows are $977,560 (-$54,881; $416,000; $520,683 and $95,758). For UI's business, Covid-19 was both a blessing and a hurdle. Business slowed down, then picked up has 3D tours demand increased. For FY 2020, I believe UI could have achieved ±$1,200,000 in OCF. Based on that estimate, cash flow yield is 3.9% ($1,200,000 / $30,400,000).
Looking backward is easy, looking forward is more challenging. The next two years should be good years. It is now a question of how well will UI and its partners execute, and how market participants will react.