Some follow up to previous posts can now be made with the release of Q2 2022 financial data...
The big three expense categories were lower than Q1
and lower than I predicted, which is noteworthy and welcome. Lower by $109,460 for the three together compared to Q1.
| Q or Year | Distribution | Administration | R&D |
| Q2 2022 actual | $ 1,339,537 | $ 1,361,728 | $ 1,046,294 |
| Q1 2022 actual | $ 1,379,783 | $ 1,312,039 | $ 1,165,197 |
| | | | |
| Predicted by me, | Q1 + 10% | Q1 + 25% | Q1 + 10% |
| ∴, for Q2 2022 | $ 1,517,761 | $ 1,640,049 | $ 1,281,717 |
Overall revenue was lower than predicted, but would have been higher if not for shipment delays.
BT: “Revenue of $4.9 million would have been even stronger without licensing shipment delays resulting from short-term supply chain issues at quarter end. Shipments of licensing revenue in the first week of Q3 which were originally scheduled for Q2 amounted to another $900k and likely would have pushed revenue closer to record territory.”
A second factor affecting the hardware revenue reported for Q2 is noted on page 17 of the full report:
"Hardware revenue in Q2 2022 saw a decrease of 35.0%, offsetting a portion of the large increases in hardware shipments seen in Q1 2022." If these two quarters were simply averaged (Q1 2022 was $2,109,598 and Q2 2022 was $912,682),
hardware revenue could have been higher in Q2 by about $600K. (Of course, Q1 would have been worse off by the same $600K.)
The explanation given for the increase in technical services revenue indicates that there was typical revenue of about $45K in Q2 with technical services revenue from CrossConsense adding about $367K.
Using the rationale from an earlier post for how much more revenue would have been needed to compensate for a given loss, it can be calculated that $2,044,321 in additional revenue in Q2 would have negated the loss as reported. This, of course, is an approximation.
As a formula... The loss to compensate for (as reported, $1,141,140) = 55.82% of additional revenue $1,141,140 = additional revenue 55.82% $2,044,321 = additional revenue Flyht would have needed $2,044,321 in additional revenue to overcome the reported loss of $1,141,140 and break even - at a gross profit margin of 55.82%. I think we can expect future quarters to require revenue of $7M or more to break even.
This simplistic reckoning doesn't account for any of the big three expense categories having larger values if Flyht had, in fact, produced and sold more goods.
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Quick pencil notes made during the CC (with no way to replay and confirm)...
1) BT’s expectation that Flyht will be EBITDA positive in Q3.
2) The order for 30 WVSS-II units for the UK Met Office will be paid for by 2022 year end. 12 to 13 units will be installed on Logan Air, the others TBD. These units are high margin. All units should be installed by the end of Q1 2023. Hardware could generate revenue of $2.5M, then SaaS for 5 years will follow.
3) CrossConsense Q2 revenue was roughly $1.1M. 70% of this was SaaS, about $770K.
4) BT made a general comment to the effect that gains in revenue in the near term will be made from the sale of hardware, with SaaS revenue becoming predominent eventually. (I had come to the same realization a month or more ago.)