AEYE announced that third quarter revenue is $4.7 million and $4.1 million of this is essentially license swaps with the other $600k cash sales. This is about what I expected given the small number of deals that they announced were cash released in press releases during the quarter. They also say they will be profitable again, which would have been a shock if they weren’t given $4.7m of book revenue.
The fact that they are getting some customers to pay cash right now is enough for me to hold the shares I have, although I’m not looking to increase my holdings right now. Need to see more of how the cash revenue trends, and also to ensure they are able to collect on the few cash sales that they do have.
Would still love nothing more than to get some level of detail on what these licenses and intangible assets are that they are receiving in return for so much of their revenue. It’s hard to believe that they don’t provide the owners with more information on those in previous 10-Q’s. If it’s not included in the Q3 filing and they don’t provide more info on it, I might actually contact the SEC and tell them that material information is not being disclosed to shareholders. I’d prefer not to go down that route for obvious reasons, so I’ll reach out to the company first now.
The fact that they are getting some customers to pay cash right now is enough for me to hold the shares I have, although I’m not looking to increase my holdings right now. Need to see more of how the cash revenue trends, and also to ensure they are able to collect on the few cash sales that they do have.
Cross-license related revenue in the most recent quarter amounted to approximately $4.1 million and cash-related revenue approximated $600,000 (representing an increase of over 500% relative to cash-related revenue for the quarter ended June 30, 2014).
It is not clear how much was actually received in cash but the release. Cash related may just mean they agree to pay cash over a period of time but has to be within the period for them to record the revenue.
The annualized revenue “run rate” for the most recent quarter approximated $19 million.
Not sure what this is suppose to mean, is it that they say they had $4.7M in revenue in the last Q and that 4.7 x 4 is 18.8 so approx $19M?
But on that logic, maybe only about $2.4M is cash related?
It is not clear how much was actually received in cash but the release. Cash related may just mean they agree to pay cash over a period of time but has to be within the period for them to record the revenue.
That’s exactly what is means, that they now have a receivable to hopefully be collected in cash in the future. I’d be shocked if they have received any cash for any of their Q3 revenue as of today, which is why I mentioned that we need to ensure they are able to collect on the cash sales that they have had recently.
The annualized revenue “run rate” for the most recent quarter approximated $19 million.
Not sure what this is suppose to mean, is it that they say they had $4.7M in revenue in the last Q and that 4.7 x 4 is 18.8 so approx $19M?
Yes, that is correct, that’s what they mean by “run rate”.
*) The management is very aggressive in promoting the company. They mention in this release and in previous release repeatedly about their potential future opportunities such as negotiation with 50% of the federal government agencies, and numerous state, local and municipal government agencies. Most companies would keep quiet on such matters.
*) The company is making some progress in the real sense - not just talking based on the contracts signed.
*) Cross-license contracts may not be exactly what we want to see but considering AEYE is such a small company and is just started, those Cross-license contracts are positive in the sense that 1) they may lead to future revenue; 2) they may lead to expanded or renewed contracts; 3) they may spread words of mouth or in some other way serve a marketing role; 4) they may bring to AEYE some useful technology; 5) AEYE technology may be built into licensees’ products for future revenue.
*) Eager to see how much they will collect from cash contracts.
*) Eager to see if they can keep the Cash contract growth trend.
*) The management may or may not be trustworthy at this point (in my mind due to lack of information and track record in running AEYE) but I assume they are not stupid and they must see the benefit in striking those non-cash deals, unless they made all these up to pump up the share price - I do not think it is the case.
AEYE management certainly seems to be pumping their stock, but on the other hand they do have something to crow about. They seem to be growing incredibly fast, even if it’s hard to get a clear picture.
Also, I’ve not been able to find any insider sales. I’ve looked on the Edgar Form 4 database site and Oracle’s insider trading site, and others. Either there are no insider sales (so half of the “pump and dump” is missing) or they don’t have to file Form 4’s because they aren’t listed yet on an exchange. Does anyone else have an idea about this?
Saul
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Either there are no insider sales (so half of the “pump and dump” is missing) or they don’t have to file Form 4’s because they aren’t listed yet on an exchange. Does anyone else have an idea about this?
After a brief look, my take is they need to prop up the stock price because the company is desperate for cash, not because insiders want to sell shares at this point. They are using their stock (and warrants and options) in lieu of cash to keep the business alive, thus the stock price is crucial to their viability right now. In Q2 it appears they paid for about 20% of their operating expenses using stock. In addition, they use options, warrants, and performance share units to help compensate (and retain) employees. For example, Sean Bradley’s stock related compensation was $627K in 2013 whereas his cash compensation was $87K.
Incidentally, the stock related compensation for some of the officers is tied to revenue goals, with varying percentages. For example, 75% of Mr. Crawford’s performance share units are dependent on targeted revenue goals. It’s not surprising to see these nonmonetary revenues.
I got a reply from the company regarding providing more details of the intangibles that they are receiving in exchange for the noncash license sales/swaps. It was from the Chairman Paul Arena and he essentially said pretty generically that they would “make the required disclosure in the next 10-Q”.
He offered to speak to me via phone, although I don’t expect it’s worth the call as I don’t think I would get anything substantive from him (nor do I think he should be telling anything that hasn’t been communicated to other shareholders given SEC rules). As I’ve mentioned here before, I’ve spoken previously to the company’s CFO. He was friendly enough but there wasn’t much to be gained from our chat that would help me from an investment decision standpoint.
and if it wasn’t clear from my message above, I’m not optimistic that they will provide much more detail than what has been included in recent 10-Q’s, based on Paul’s generic response. I hope they do, but they seem to be keeping this information close to the vest. I do still think that I’ll probably go the SEC route if I believe their disclosure is insufficient next month.
Not sure what this is suppose to mean, is it that they say they had $4.7M in revenue in the last Q and that 4.7 x 4 is 18.8 so approx $19M?
Yes, that is correct, that’s what they mean by “run rate”.
It is what they mean but it is not an accurate definition of what Run-rate means. It is this kind of press release that is very misleading.
http://www.investopedia.com/terms/r/runrate.asp
"The run rate can be a very deceiving metric, especially in seasonal industries. A great example of this is a retailer after Christmas. Almost all retailers experience higher sales during the holiday season. It is very unlikely that the coming quarters will have sales as strong as in the 4th quarter, and so the run rate will likely overstate next year’s revenue. "
I work in the channel distribution business and that is certainly not how we would define “run-rate.” We really look at Run-rate as being the basic reoccurring revenue without any major projects. It is just what happens from the normal day-to-day business without a lot of direct involvement and the projects is what accounts for making the difference.
But to just take a quarter’s number and say that if I were to expand it over 4 quarters without any basis to think it will happen is a lot of fluff.