Second quarter financial statements I had a look at the financial statements and participated in the conference call.
Income statements
For the second quarter, software revenues were $612,619, slightly higher than the previous quarter ($598,802), but less than the same quarter one year ago ($656,000). 37% of software and equipment sales were derived from Canada and 63% from the USA. Gross merchant volume (GMV) for the quarter was $2,602,000 versus $2,108,000 one year ago. A reminder that there is no direct correlation between GMV and software revenues. Average revenue per transaction averaged around US$13 per transaction. Apparently, UI has increased the number of clients, but clients have done less shoots than previous quarters. The strength in the Canadian currency reduced revenues by 6%. Not sure how UI arrived at that math since from January 1, 2021 to March 31, 2021 the Canadian dollar appreciated by ±1% ($0.7842 - $0.7922) and from March 31, 2020 ($0.7052) to March 31, 2021 ($0.7922), the Canadian dollar appreciated by 12.34%. In the press release, UI claims that real estate transactions are down significantly (-50%). If that is the case, when the real estate market returns to an equilibrium, UI could achieve second quarter, software revenues above $1,000,000.
Revenues from Immersolution were $369,747, $69,000 more than the previous quarter. Revenues from Immersolution were significantly higher than a year ago, but Immersolution was purchased in February 2020, so second quarter 2020 revenues were calculated for a six-week period instead of twelve weeks.
Cash flow Statements
Net cash related to operating activities was $75,856. The trailing twelve months net cash related to operating activities stands at $957,658. Net cash related to operating activities is a more reliable indicator of UI financial strength than profits or EBITDA.
Financing activities added $1,875,218 to cash.
Balance Sheet
As of Aril 6, 2021, UI had ±$4,000,000 in cash.
UI has a long-term debt of $1,703,000. Given the low interest payment, UI will continue to make regular payment. UI carries on its book a property and equipment worth $1,019,409.
Shares Outstanding
As of April 6, 2021, Urbanimersive had 144,824,664 shares outstanding. They are 6,319,098 options or warrants whose exercise share price is below $0.17. If exercised, UI would receive $2,045,296.
| 144,824,664 | Shares outstanding |
| 6,319,098 | Options and warrants |
| 151,143,762 | Total shares |
| $0.17 | Share price |
| $25,700,000 | Market cap |
| +$1,703,000 | Debt |
| -$4,000,000 | Excess cash |
| -$2,045,000 | Cash from options and warrants |
| $21,360,000 | Enterprise value |
| $957,000 | TTM OCF |
| 4.5% | Cash flow yield |
Is UI's valuation cheap? That depends on the future operating cash flows (OCF). OCF for the past two quarters were weak, and for the current quarter, will likely be better. OCF for the fourth and third quarters 2020 were stronger. What will OCF for the current quarter and the future quarters be? Analyzing previously quarterly numbers is easy, predicting future OCF, especially for a small cap is hazardous.
Two Growth Prospects
During the conference calls, investors learned that Prospects Software and UI were in advance talks with Bright MLS and other unnamed Multiple Listing Services (MLS). Bright MLS is the largest MLS in the USA.
Bright has 95,000 real estate professionals, not all are real estate agents. According to the MLS Bright website, for the fourth week of May 2021, total available inventory continued to improve. Total new active listings were 42,500 properties versus 57,100 in 2020 and 2019. That is an improvement over the fourth week of February 21, 2021, when total new active listings were 28,300 properties versus 54,300 in 2020 and 2019. In the past 30 days, 9,906 properties were listed and of those newly listed properties, 2,123 were sold within less than 30 days. If the region covered by Bright MLS is a good proxy for the US market, then UI should soon see a rebound in revenue.
On average a real estate agent sales 10 properties per year, I could not find data of how many properties an agent list per year. 89% of sellers were assisted by a real estate agent when selling their home. The typical home sold was on the market for 3 weeks. 51% of buyers found the home they purchased from the internet and 28% from real estate agents.
https://theclose.com/real-estate-statistics/
Before the end of the year, MLS Bright and UI and Prospects Software should enter into an agreement. I do not know what the revenue-sharing agreement between UI and Prospects Software is. MLS Bright will pay an annual or monthly fee to UI and in return, UI will, through the Prospects Software, offer services to the 95,000 real estate professionals. An agent search result on Bright MLS websites indicates that there are 137,175 agents listed. Their status is not provided.
Before the end of the year, these professionals will become aware of UiMeet3D. Some will phone their photographers and ask how they can use UiMeet3D. In order to access this service, the photographers will have to do business with Urbanimmersive. Let's assume that 5,000 real estate agent decides to use Urbanimmersive and that these 5,000 real estate each list 10 properties per year. That is an additional 50,000 transactions that could go through UI's platform. Current average price per transaction is $13 ($650,000), but if they are going to use UiMeet3D, buy a floor plan and a website, the average price will be higher. Are my assumptions realistic or are far-fetched? Time will tell.
Prospects Softwares offers services to more than 230 MLS associations.
Acquisition
UI has $4,000,000 in cash, could issue shares and borrow more funds in order to make an acquisition. In all likelihood, an acquisition will encourage the Board of Directors to consolidate (reduce) the number of outstanding shares. A higher share price will allow more trading platform to negotiate UI's shares. An acquisition could be transformative.
Dollhouse
During the conference call, the CEO announced that UI was working on adding a Dollhouse view to UI's platform. In my opinion, the dollhouse will help win over photographers using the Matterport platform. The dollhouse will also help win over licensing deals.
Babe Ruth Trading Card
Urbanimmersive valuation is trading at roughly 3 times the value of Babe Ruth's 1914 Baltimore Baseball card US$6,000,000.
https://hypebeast.com/2021/6/ebay-babe-ruth-trading-card-shares-buy-sell
I had a look at the financial statements and participated in the conference call.
Income statements
For the second quarter, software revenues were $612,619, slightly higher than the previous quarter ($598,802), but less than the same quarter one year ago ($656,000). 37% of software and equipment sales were derived from Canada and 63% from the USA. Gross merchant volume (GMV) for the quarter was $2,602,000 versus $2,108,000 one year ago. A reminder that there is no direct correlation between GMV and software revenues. Average revenue per transaction averaged around US$13 per transaction. Apparently, UI has increased the number of clients, but clients have done less shoots than previous quarters. The strength in the Canadian currency reduced revenues by 6%. Not sure how UI arrived at that math since from January 1, 2021 to March 31, 2021 the Canadian dollar appreciated by ±1% ($0.7842 - $0.7922) and from March 31, 2020 ($0.7052) to March 31, 2021 ($0.7922), the Canadian dollar appreciated by 12.34%. In the press release, UI claims that real estate transactions are down significantly (-50%). If that is the case, when the market returns to an equilibrium, UI could achieve second quarter, software revenues above $1,000,000.
Revenues from Immersolution were $369,747, $69,000 more than the previous quarter. Revenues from Immersolution were significantly higher than a year ago, but Immersolution was purchased in February 2020, so second quarter 2020 revenues were calculated for a six-week period instead of twelve weeks.
Cash flow Statements
Net cash related to operating activities was $75,856. The trailing twelve months net cash related to operating activities stands at $957,658. Net cash related to operating activities is a more reliable indicator of UI financial strength than profits or EBITDA.
Financing activities added $1,875,218 to cash.
Balance Sheet
As of Aril 6, 2021, UI had ±$4,000,000 in cash.
UI has a long-term debt of $1,703,000. Given the low interest payment, UI will continue to make regular payment. UI carries on its book a property and equipment worth $1,019,409.
Shares Outstanding
As of April 6, 2021, Urbanimersive had 144,824,664 shares outstanding. They are 6,319,098 options or warrants whose exercise share price is below $0.17. If exercised, UI would receive $2,045,296.
| 144,824,664 | Shares outstanding |
| 6,319,098 | Options and warrants |
| 151,143,762 | Total shares |
| $0.17 | Share price |
| $25,700,000 | Market cap |
| +$1,703,000 | Debt |
| -$4,000,000 | Excess cash |
| -$2,045,000 | Cash from options and warrants |
| $21,360,000 | Enterprise value |
| $957,000 | TTM OCF |
| 4.5% | Cash flow yield |
Is UI's valuation cheap? That depends on the future operating cash flows (OCF). OCF for the past two quarters were weak, and for the current quarter, will likely be better. OCF for the fourth and third quarters 2020 were stronger. What will OCF for the current quarter and the future quarters be? Analyzing previously quarterly numbers is easy, predicting future OCF, especially for a small cap is hazardous.
Two Growth Prospects
During the conference calls, investors learned that Prospects Software and UI were in advance talks with Bright MLS and other unnamed Multiple Listing Services (MLS). Bright MLS is the largest MLS in the USA.
Bright has 95,000 real estate professionals, not all are real estate agents. According to the MLS Bright website, for the fourth week of May 2021, total available inventory continued to improve. Total new active listings were 42,500 properties versus 57,100 in 2020 and 2019. That is an improvement over the fourth week of February 21, 2021, when total new active listings were 28,300 properties versus 54,300 in 2020 and 2019. In the past 30 days, 9,906 properties were listed and of those newly listed properties, 2,123 were sold within less than 30 days. If the region covered by Bright MLS is a good proxy for the US market, then UI should soon see a rebound in revenue.
On average a real estate agent sales 10 properties per year, I could not find data of how many properties an agent list per year. 89% of sellers were assisted by a real estate agent when selling their home. The typical home sold was on the market for 3 weeks. 51% of buyers found the home they purchased from the internet and 28% from real estate agents.
https://theclose.com/real-estate-statistics/
Before the end of the year, MLS Bright and UI and Prospects Software should enter into an agreement. I do not know what the revenue-sharing agreement between UI and Prospects Software is. MLS Bright will pay an annual or monthly fee to UI and in return, UI will through the Prospects Software, offer services to the 95,000 real estate professionals. An agent search result on Bright MLS websites indicates that there are 137,175 agents listed. Their status is not provided.
Before the end of the year, these professionals will become aware of UiMeet3D. Some will phone their photographers and ask how they can use UiMeet3D. In order to access this service, the photographers will have to do business with Urbanimmersive. Let's assume that 5,000 real estate agent decides to use Urbanimmersive and that these 5,000 real estate each list 10 properties per year. That is an additional 50,000 transactions that could go through UI's platform. Current average price per transaction is $13 ($650,000), but if they are going to use UiMeet3D, buy a floor plan and a website, the average price will be higher. Are my assumptions realistic or are far-fetched? Time will tell.
Prospects Softwares offers services to more than 230 MLS associations.
Acquisition
UI has $4,000,000 in cash, could issue shares and borrow more funds in order to make an acquisition. In all likelihood, an acquisition will encourage the Board of Directors to consolidate (reduce) the number of outstanding shares. A higher share price will allow more trading platform to negotiate UI's shares. An acquisition could be transformative.
Dollhouse
During the conference call, the CEO announced that UI was working on adding a Dollhouse view to UI's platform. In my opinion, the dollhouse will help win over photographers using the Matterport platform. The dollhouse will also help win over licensing deals.
Babe Ruth Trading Card
Urbanimmersive valuation is trading at roughly 3 times the value of Babe Ruth's 1914 Baltimore Baseball card US$6,000,000.
Leading sports memorabilia investment platform collectable announced on Wednesday that an ultra-rare 1914 Baltimore News Babe Ruth Pre-Rookie Card will soon be sold for $3 USD a share. The platform will be offering 20,000 shares of the collectible asset, valued at around $6 million USD.
https://hypebeast.com/2021/6/ebay-babe-ruth-trading-card-shares-buy-sell