Will we see a profit in 2023? How much more revenue in 2023 might FLYHT need to overcome the $1,003,033 situational loss in 2022?
2023 will prove to be quite a different year from 2022 but, simplistically, if expenses were to stay roughly the same, revenue need only increase by about $2M from the $23,879,160 FLYHT just reported as revenue for 2022. If a comparable year, perhaps $26M in 2023 would do it. If another 10% was to be added for increasing expenses and a margin of error, revenue of $29M would seem more than adequate.
| Category | 2022 Actual |
| | |
| SaaS | $ 8,157,886 |
| Hardware | $ 4,720,204 |
| Licensing | $ 9,101,130 |
| Services | $ 1,899,940 |
| | |
| Total revenue | $ 23,879,160 |
Enough cash on hand? Seems to be. AF: "We've had healthy cash generation in the first quarter. ... We don't anticipate a working capital need." Management is mindful.
Enough deliverable orders to replicate non-licensing 2022 revenue? Seems to be. The backlog sits around $25M, the sales pipeline around $70M. No concerns have been voiced.
Are any new or additional expenses occurring? Enough time has passed for CrossConsense expenses to have become fully absorbed (it’s paying for itself and more). FLYHT’s Denver office has been purposefully busy and will get busier with weather-related matters, but increased weather-related revenue is in sight. The new hires have been with FLYHT for months now with recompense coming soon when sales of the Edge commence.
There will always be the risk of another epidemic or war or natural disaster - outside of insurance, not much defense for that.
I have been wondering about any expenses or payouts related to the passing of Bill Tempany which probably need to happen before the end of 2023.
Everything else would seem to be scale-related – just before he passed, Bill did say his greatest concern was managing growth.
The biggest question seems to be around L3H/Airbus licensing - can FLYHT replicate the record $9M in high-margin licensing revenue in 2022? If FLYHT can't replicate the full $9M, is there enough other business to make up the shortfall?
Will we see a boost in revenue from new sources?
Wildcards include: the commencement of Edge and Edge+ hardware sales (pending acquisition of the necessary STCs); the subsequent commencement of revenue from the partnership with MBS; sales of weather sensors for meteorological organizations like NOAA, E.C.C.C. and U.K. Met.; AFIRS SatCOM deliveries - notably for the ARJ-21 and C919, and for Frontier Airlines; new SaaS revenue from FLYHT's latest Actionable Intelligence software; new SaaS revenue and hardware sales related to partner Swoop and real-time APU management; revenue from the service and hardware partnership with SITA.
The full return to pre-COVID flight hours for the increase in SaaS and weather data sales they would bring could almost be viewed as new, at least additional, revenue when comparing 2023 to 2022. A lot hinges on the full recovery of AirAsia specifically, but this seems to be well underway. International flights in parts of the world are still lagging, though.
With what data there was available in mid-November 2022, KRC Insights came quite close to predicting the actual revenue for Q4 2022, which speaks well for their methods. Conservatively under in each category, I might add, or FLYHT out-performed.
| Category | Q4 KRC | Q4 Actual |
| | | |
| SaaS | $ 2,217,000 | $ 2,253,618 |
| Hardware | $ 951,000 | $ 1,217,860 |
| Licensing | $ 2,800,000 | $ 3,030,368 |
| Services | $ 440,000 | $ 739,912 |
| | | |
| Total revenue | $ 6,408,000 | $ 7,241,758 |
In November, 2022, using the same available data, KRC predicted revenue of $37M for 2023.
| Category | Estimate for 2023 |
| | |
| SaaS | $ 14,611,000 |
| Hardware | $ 21,977,000 |
| Licensing | $ - |
| Services | $ 420,000 |
| | |
| Total revenue | $ 37,008,000 |
This forecast far exceeds the simplistic revenue requirement of $29M I estimated earlier. If KRC is anywhere in the ballpark, and they did well with their revenue forecast for Q4 2022, profit in 2023 seems assured.
Granted, KRC’s numbers would have been based on Edge sales commencing by now in 2023 so I expect KRC would want to lower the revenue estimate they made. Even if 20% lower, KRC’s revenue estimate would still be $29.6M.
Additionally, there is $0.00 shown for licensing revenue in the November report.
KRC: "The final Licensing revenues from the 4/5/22 US$5.65m order from its OEM partner will be shipped in Q4/22E.
We do not forecast License revenues for 2023E."
My opinion: I can't imagine that L3H would pre-pay for 2023 licenses in 2022, and they will need licenses in 2023. Therefore, I fully expect that there will be some licensing revenue realized in 2023.
FLYHT management stated just a week ago that "demand for the ... AFIRS 228 SatCOM remains at an all time high". This supports my position.
With KRC predicting no licensing revenue in 2023, whatever FLYHT does make in licensing revenue in 2023 would be on top of the revenue estimates they did make.
We should get a really good idea how the year will go from the Q1 2023 financials which should be out in just a few weeks.
KRC's reports presently reside on this page at FLYHT's site.
https://flyht.com/investors/why-invest/