Anticipating newsDated August 18, 2022, KRC's summary rationale for a share price target of $2.70.
Q2/22. Revenues grew 66.8%, driven mainly by the inclusion of the CrossConsense acquisition for its first full quarter ($1.1m) and the initial contribution from the US$5.65m licensing deal ($1.4m). YoY revenue growth would have been 97.5% were it not for $900k of licensing revenues deferred until the first week of July.
Gross margin. Gross margin improved to 55.8% from 52.4% LY due to sales mix: greater contribution from higher margin Licensing revenues in the current quarter.
EBITDA was a loss of $906k and could have been -$141k if the $900k licensing revenues deferred until July were delivered in Q2.
Significant events. Central to our view of significant revenue growth in F2023 due to initial sales of the Edge device is obtaining the STCs for various aircraft types. Progress is being made and we expect to hear updates in this regard ~Sept/Oct timeframe. Also, the UK Met Office has indicated to FLYHT that it will buy 30 WVSS units. If/when this contract is signed, it should contribute ~$3.0m in hardware sales in Q1-Q2/23. There are additional SaaS revenues expected from this contract.
New head of sales/Sales team. FLYHT continues to upgrade and deepen its sales team in anticipation of the launch of the Edge device. On 11/8/22, FLYHT announced that effective 1/9/22 it had hired two additional salespeople from Teledyne, one of which was made new VP Sales and Marketing. The sales team now comprises ~8 employees, 6 of whom were hired during the past year.
BlueSky. Consistent with our previous report, we provide an estimate of the size of the Edge device’s addressable market. Given the new sales hires and the significance of its sales channels, we estimate, at the low end (10% penetration with SITA), that the Edge device could add $27m in hardware sales and consequently $6.5m p.a. in SaaS revenues.
Upcoming catalysts. Announcement of Edge device STCs, initial Edge device contract(s), and a potential WVSS order. We expect to hear continued traction with regards to the AFIRS 228.
Valuation. We forecast that FLYHT will finish F2022 with a strong Q3E and Q4E driven primarily by delivery against the balance of the OEM licensing contract (US$5.65m to be delivered in F2022) and a strong recovery in AFIRS 228 sales against the current backlog. This will result in FLYHT being cashflow positive for both quarters. This, combined with expected initial orders for the Edge device, we raise our target to $2.70 (from $2.50) due to an increase in our segmented valuation SaaS multiple to 6.5x (from 6.0x) reflecting our increased confidence in FLYHT’s ability to execute. -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
Flyht news releases in Q3...
Aug 31, 2022 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
Yet to be publicly announced, Flyht did receive an STC for the Edge on October 26th.
https://stockhouse.com/companies/bullboard?symbol=v.fly&postid=35053824 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --