Revenue growth
Finding new clients (real estate agents) and adding new photographers and not losing any, is the key to growth.
Revenue growth is also dependent on the number of properties listed for sale. UI has no control on the number of listings.
For 2022 and 2023, if the newly acquired REPAs grow their revenues, that growth will not be entirely reflected in an increase in valuation, since UI will issue shares as part of the acquisition package.
Software growth is more difficult to predict, but software revenues represent approximately 25% of UI's business.
Net margins
At this point in time, there is not enough information to estimate the net margins for software revenues and for revenues from photo agencies. UI's debt level has increased and is probably in the $3,500,000 range. There are integration costs and uncertainties. Investors do not know how photographers have reacted to the change of ownership or how profitable those businesses are.
So here are three scenarios with different net margins.
Software revenues are based on 2021 FY results multiplied by 1.15 and the net margin used is 20%.
Immersolution revenues were estimated based on 2021 FY results multiplied by 1.05 and the net margin used is 10%.
Photo agency revenues were estimated based on reported revenues multiplied by 0.95 and the net margin used is 20%.
| | | Calendar year 2022 |
| | | 12 month period | Net margins |
| Software | 26% | $3,078,000 | $615,600 |
| Immersolution | 9% | $1,112,000 | $111,200 |
| Photo agencies | 65% | $7,665,000 | $1,531,000 |
| Revenue | | $11,845,000 | $2,258,000 |
Net margins $2,258,000
Cap rate yield 7%
Market cap $32,255,000
Number of shares 33,184,000
Share price $0.97
Software revenues are based on 2021 FY results multiplied by 1.15 and the net margin used is 15%.
Immersolution revenues were estimated based on 2021 FY results multiplied by 1.05 and the net margin used is 10%.
Photo agency revenues were estimated based on reported revenues multiplied by 0.95 and the net margin used is 15%.
| | | Calendar year 2022 |
| | | 12 month period | Net margins |
| Software | 26% | $3,078,000 | $461,700 |
| Immersolution | 9% | $1,112,000 | $111,200 |
| Photo agencies | 65% | $7,655,000 | $1,148,250 |
| Revenue | | $11,845,000 | $1,721,150 |
Net margins $1,721,000
Cap rate yield 7%
Market cap $24,600,000
Number of shares 33,184,000
Share price $0.74
Software revenues are based on 2021 FY results multiplied by 1.15 and the net margin used is 15%.
Immersolution revenues were estimated based on 2021 FY results multiplied by 1.05 and the net margin used is 10%.
Photo agency revenues were estimated based on reported revenues multiplied by 0.95 and the net margin used is 10%.
| | | Calendar year 2022 |
| | | 12 month period | Net margins |
| Software | 26% | $3,078,000 | $461,700 |
| Immersolution | 9% | $1,660,000 | $111,200 |
| Photo agencies | 65% | $8,461,000 | $765,500 |
| Revenue | | $11,845,000 | $1,338,400 |
Net margins $1,340,000
Cap rate yield 7%
Market cap $19,120,000
Number of shares 33,184,000
Share price $0.58
What is known is that UI's debt payments have increased, new listings are still near their lows and real estate photo industry is a competitive and a seasonal business. 65% of UI's business is tied to real estate photo agencies and 9% to hardware sales. That type of activity does not deserve a high cap rate yield.