Saul's Checklist

With so many great companies on sale it’s just hard to find the best place to grow my future fortune. I thought it would be a good exercise to compare my highest conviction name against Saul’s Stock picking criteria. With the hammering of growth stocks and companies trading at high multiples (flawed as this may be), I’m particularly interested in this company because it is trading so cheap.

I’ve left Saul’s stock picking criteria italicized and the company comparison in bold:

First, most of my stocks start with a recommendation and write-up by someone I have a lot of confidence in. This could be someone on the board, Bert, Motley Fool, or more rarely a write-up by someone else on Seeking Alpha.

This stock falls strictly under the “more rarely a write-up by someone else on seeking alpha.” and I would definitely consider it under-followed.

Second, I would want rapid revenue growth. My ideas about that have become inflated in the last couple of years and where I once might have looked for 20% to 25% as very fast growth, I’m now looking for 35% growth, and usually more.

Revenue growth:
FY 2021 30% YoY
Q4 2021 41% YoY
Q1 2022 45% YoY

Growth appears to be accelerating and pressing past the 35% threshold, but I do believe Saul is less interested in anything under 50%.

Third, I look for a stock in a special niche, with something special about it. I guess this could be considered a moat. It also could be considered a potential big future.

The company works in AI operating systems, data-management (think SentinelOne dataset, DDOG, etc), and its current exposures include government regulation / law-enforcement, energy / utility management, advertising, and the metaverse. I do feel this company is in a special niche with a lot to offer in a few massively growing spaces.

Tied for Third, I look for recurrent revenue. I want my company to have last year’s revenue repeating this year and building from there, and not a company that has to go out and grow by selling the whole thing over again. God, this is important! It usually means software, and a SaaS model, and NOT selling things. You just can’t keep growing at 40% selling things. And when an economic slowdown hits, people will put off buying a new car, or a new house, but companies won’t tear out the software that keeps their company going. Software also usually means not capital intensive, and it also means high gross margins.

the company’s revenue is a currently a combination of SaaS and use-based billing. This is one area of weakness in the story currently, but SaaS customers increased 45% YoY and software revenue increased 78%, so I’m happy with those numbers so long as they continue to trend. There is some amount of seasonality I believe with licensing that seems to mostly be realized in the second half of the year.

Gross Margins 80%+ are very good and have only improved over the past two years.

Fifth, I look for rapidly improving metrics like rapidly dropping losses as a percent of revenue, or increasing profits if there are some already, increasing gross margins, customer acquisitions, improving cash flow, dropping operating expenses as a percent of revenue, etc. If some metrics aren’t improving (S&M as a proportion of revenue, etc), because management says they are taking advantage of a greenfield opportunity to gobble up all the recurring revenue customers they can while the getting is good, I generally approve, but want to see those revenues really growing.

This company was non-GAAP profitable for the first time last year and is guiding for increased profitability in 2022 and beyond with many references to “accelerating material growth” in 2023 and beyond by management.

Sixth, I’d demand a dollar-based retention rate over 100%. I look for one over 120%, and I’m impressed by one over 130%. A high Net Promoter score is nice too, but there’s no easy way to get that information.

DBNRR 120%+

Seventh, It’s been a long time since I’ve been in a company that didn’t have a lot of cash and had a lot of debt. Almost all of my companies are founder led, but I think that’s mostly because they haven’t been around for generations. They also don’t have huge customer concentrations (top three companies making up 30%-40% of revenue). But I don’t seem to have to look for those features, they just come with the territory.

Cash on hand is more than debt, and nearly 67% of the market cap, management has discussed pursuing acquisitions but has been clear to communicate they have more than enough cash to cover operations for the foreseeable future. Customer concentration is a red flag as Amazon accounts for 30% of revenue, though non-amazon customer growth was 200% YoY-- With Amazon’s recent “earnings” this company’s share price was material impacted in sentiment, though it seems at least thus far to be grossly over-reacted. Nonetheless a yellow flag / “watch-out” event.

I, like you, constantly monitor these factors and I exit if they seem to have changed for the worse, or if I think I made a mistake in the first place, or if I’ve lost confidence, or if there are new facts. But somehow, EV/S never enters into my consideration.

I do like to monitor P/S multiples, though I weigh them against YoY growth and gross margin considerations and probably care about them more in a recessionary environment or a draw down. Here’s a quick look at some of the P/S multiples of our companies.

MNDY 13x 
CRWD 21x
ZS   25x
S    22x
DDOG 21x
NET  22x
BILL 16x
ZI   21x
SNOW 29x
MDB  16x

This Companies P/S is currently 2x.

A Quick Recap:
SaaS Model in the AI space
48% YoY growth
120% DBNRR
80% Gross Margins
RPO 100% YoY
Employee Count increased 25% in Q1 2022
Customer Concentration is a concern
P/S 2x 

You guessed it, the company is non-other than Veritone (VERI)


There's an analyst update and product demo today (May 13)


The numbers I provided are all “organic” and “pro forma” numbers, they actual numbers are much higher due to recent acquisitions-- which have so far proven accretive.

Obviously I believe Veritone is grossly undervalued which I attribute primarily to the indiscriminate sell-off in tech / growth, and smaller cap stocks. The moat seems to be massively expansive.

This is a pick and story I really like and I materially increased my position after the earnings drop.

I thought since the bottom is in and we are going to spend the rest of the year making money, it would be fun to talk about what stocks to invest in and which companies we like.

Veritone is one of those companies for me.

Stake Now – Steak Later!

Peace, Health, & Prosperity




Great write-up! Can you elaborate more on how you learned of VERI and what put it on your radar? Was it a write-up from SA? You make a compelling case, but this is the first I’ve heard someone mention VERI. Just curious on what brought it to your attention…and thanks again for sharing the case for it.


Thanks for reading!

I’m actually the co-founder of Veritone. Just kidding. I do not work for Veritone and am not associated with them in any way.

Actually it’s much simpler and more time consuming. I have a few filters I created on SA to find stocks that meet some of our criteria, this is under the “Stock Screener” tab of “Top Stocks” on SA-

I have half a dozen profiles I’ve created to look at varying levels of rev. growth, gross margins, market cap, FWD rev., region in the world (I like U.S-based companies), and sectors in the market, etc.

The filters typically produce between 25-85 stocks, then I start weeding through them one by one digging into the business and story and discovering what the actual numbers are. As you can imagine often the search results are skewed by acquisitions, poor comparison years, etc.

Generally using these filters I find 1-3 stocks that are really interesting to me. Obviously I read any write-ups by SA authors, do my own research, contact IR, and begin attending events and presentations for the 1-3 companies that intrigue me. I need to understand the story and believe in the growth. If it becomes too complicated or the information seems ambiguous I’m turned off.

I also have a spread sheet built to track a rather large watch list of companies to compare rev. growth, gross margins, DBNRR, customer growth, cash on hand/debt, P/S, ARR rev., and try to include a variety of sector competitors so I can kind of see everything in one place.

Veritone’s story is intriguing to me, their products make sense to me, and the market for them over the next 2-20 years seems incredibly large to me. Also management’s background in datacentric advertising and adtech are a huge bonus to me as I believe Veritone, along with AI data retrieval, has a huge TAM in advertising.

One potential yellow flag for me is the potential for acquisition (as the founders have built and sold two other businesses to the likes of Google etc). While it would be immediately profitable, I’d prefer to see Veritone continue to grow over the next decade.

There are some risks obviously-- Veritone is a small cap business, they were around $2B market cap at one point and are now $300M, I believe they will be making more acquisitions over the next year or two-- But so far all of their acquisitions have been accretive and management is open about their goals to acquire essentially accelerating exposure into customers and industries. Acquisitions mean either debt, cash draw down, or stock dilution, but they’ve managed acquisitions very well so far.

Insider ownership is around 20% and no one is selling and institutional purchasing outpaces selling more than 3:1.

I think the first paragraph answered your question.




I wrote a probably over-long reply relating to my difficulty in determining/understanding what they actually do or what their software provides. When I went to preview to see if my bolds and italics were properly executed, MF shot me a login window and of course when I returned, it was to your message and an empty reply window. Kicking myself for not saving the reply to my clipboard–but MF hasn’t done this to me for almost a year now.

So, the shortest version reduced to one bullet point is that their mission statement which I found buried on slide 7 of an investor presentation boils down to “making a better world”. Gosh. Does Cloudflare one better. Infinitely better.

KC, long VERI from about February until March 17

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Admittedly many of the companies we invest in aren’t clear to me initially— what does DDOG do? And what makes NET special?

MNDY? I tried their product and personally thought it fell very short. I Certainly didn’t feel it was investable to me as a product apart from the growth metrics.

Honestly I don’t really think Veritone’s mission is that confusing— but it does touch a myriad of sectors which perhaps makes it hard to say “they provide b2b payment reconciliation.”

Veritone’s mission is to create the best AI and AI O/S. It’s that simple (to me).

What is the AI used for? That’s just it— almost anything— they have the industry leading voice and conversational AI which in and of itself has a TAM in advertising, entertainment, Metaverse/ web3, etc—

how big is the advertising industry? Well…. GOOGLE and Facebook (Meta) are advertising companies— along with nearly every cable and streaming tv service—

This is of course entirely unique from their AI data analytics that 100 law enforcement agencies use to satisfy state laws (——) which is unique from how their AI platform identifies athletes and provides real time data during high speed sporting events to network customers—-

Which is completely unique from how their iDERMS AI is used to provide price, demand and generation forecasts for solar and wind energy in real time.

This is similar to me how SentinelOne is leveraging their AI technology to create dataset. When you have the tech and the platform / OS, their are simply too many use-cases but management had been clear about their mission— to do AI better than anyone else— and to create the OS to host third party AI stacking.

I know this won’t be appealing to a lot on the board. But it’s my conviction investment and trades at a valuation with execution and a runway I believe could be transformational. I have only seen the business improve and management execute on their goals. Profitable, focused on AI, touching many industries.

I feel I’m getting off track. I really just wanted to walk through Veritone compared to Saul’s criteria and see if it checked the boxes. I don’t feel entirely comfortable with others investing based on my conclusions. My convictions are my own based on the vision and execution of the company and what runway I can see for it.

I suppose if there is something I’m missing that is a big red flag let me know. I realize at 45% Rev growth they are slower than any other stock on the list, but I’m okay with that it they can continue to accelerate over the next 18-36 months.

Thanks for peeking—



I suppose if there is something I’m missing that is a big red flag let me know.

I gave the company a quick look: skimmed the latest ER, including the non-GAAP supplement, and checked their financial history on macro trends web site (see…).

I do see several red flags.

You mentioned several times that it’s profitable, but it is not. They have presented an alternative non-GAAP supplement that shows if they hadn’t paid out that pesky stock-based compensation and severance, they would have eked out a tiny profit. However, SBC will be an ongoing cost, so it doesn’t make sense to just ignore this.

I also noticed that shares outstanding have been rising steadily for many years. Shareholder dilution is an ongoing headwind that the stock price will need to fight. Mature and profitable software companies do issue new stock for SBC, but also buy back stock to keep the net shares outstanding near steady state. The strongest companies will reduce shares outstanding on net, buying back more than they issue. That net reduction is like a reinvested dividend paid to shareholders, and will lead to you owning a larger slice of the company over time, which is reflected in a higher stock price.

On the flip side, when a company like Veritone issues new shares for SBC but doesn’t buy them back to neutralize the dilution, it causes existing shareholders to own a smaller slice of the company, which is reflected in a lower stock price over time. They are robbing shareholders of their future returns and using the proceeds to pay their ongoing labor costs.

To make matters worse, when a company like this is losing money, this share count dilution has a misleading effect on earnings per share. Suppose my company has a net loss of $50 million and there are 10 million shares outstanding. EPS is therefore -$5. But suppose further that I decide to issue another 10 million shares to raise capital and fund SBC. My company is still losing $50 million a year, but the EPS looks a lot better: now, instead of -$5, it’s -$2.50. People who aren’t paying close attention will point to the smaller loss per share as a good thing, mistaking this for a move to profitability, when in fact, nothing has improved on the earnings front (my company is still losing $10 million), and things have become dramatically worse on the equity front, since shareholders’ equity was cut in half.

This seems to be happening with Veritone - they have more than doubled their shares outstanding in the past 5 years, and the net loss has been growing in absolute terms, though you can’t infer that from EPS because share count is rising so fast.

You cited the high gross margin as a big positive. But gross margin isn’t a useful data point for SaaS companies. They all have high gross margin because most of the costs of running a SaaS are R&D and SG&A, which are below the GM line. These are real, ongoing costs and they don’t go away over time. Look at any big, profitable, mature software company - MSFT, GOOGL, CRM, etc - the kind of companies that these small growth companies aspire to become - they all have high ongoing costs of running the business that fall below the gross margin line. If you think these costs will become less over time as the company scales, keep dreaming. That won’t happen. Big, successful, profitable software companies all have large R&D and SG&A costs. It’s normal. They need to keep paying those expenses to stay ahead of the competition, maintain their existing products, and continue to grow. To gauge the health of the business you need to look at net income. All the big companies I cited above have large net margin even after paying all their operating costs. VERI has no net income. They have been operating the business at a big loss for 7 years. It’s not clear what the path might be to get to profitability, but it seems unlikely they will get there by increasing revenue, because they’ve been doing that, and it’s only led to larger losses.

Summary of red flags:

  • Not profitable. Net loss has steadily grown for years. 2021 was their largest loss ever.
  • Attempting to obfuscate lack of profitability with non-GAAP nonsense
  • Severe and ongoing share dilution
  • EPS trend is not useful due to said dilution - look at net income, not EPS

These issues strike me as serious headwinds for the stock price.




Thanks for the breakdown of your concerns. It’s a good exercise for me to consider my position and I think beneficial overall when looking at any stocks.

Profitability and share dilution / buybacks
I have been careful to mention they are only profitable on a non-GAAP basis in each of my posts, but you are correct in your conclusion that they are not profitable on a GAAP basis yet-- If you’re looking for GAAP profitable companies with aggressive / steady buyback programs I don’t think you’ll find that on this board.

Just for a peak though, operating expense as a % of revenue is less than half of what it was in 2018 (from 305% to 139%) – more importantly, it has gone done every single year, while revenue growth is accelerating. Revenue in 2018 was less than $27Mil—they are guiding for $180M+ this year–

Gross profit increased nearly 50% YoY and GAAP net loss actually decreased by $7% last quarter.

I also wouldn’t expect a company growing at hyper growth rates to be making share buy backs— It is simply not a good investment for the company. If you can grow customers by 45% with ARR and DBNRR over 120%, why would you spend that money on share buy backs instead of growth? Microsoft has spent a fortune on buy backs and has reduced total share count about 5% over the past 5 years— most of that was the result of $15B over the past 12 months. If they had the opportunity to grow customer count 45% YoY like Veritone did instead, they would have— but once growth slows down the investment changes.

For reference Veritone increased bookings 300%, increased SaaS customers (pro forma) 45% and software revenue 80% YoY— seems like a much better investment than buybacks long term to me.

The shares outstanding have doubled in 5 years— which was immediately following IPO— the total shares outstanding have decelerated every year and even stayed flat all of last year. They increased less than 10% since the 1st quarter of 2021—- meanwhile organic revenue has increased 45% and actual revenue has increased 88% (88% is actually the more representative number because it was the cost of the increase in shares to make an acquisition)

I’ll take 10% share dilution for 88% revenue growth, and even for 45% ARR with 120%+ DBNRR for those customers.

That being said, I do expect share dilution to continue as an investment in growth— I’m actually okay with it as a access to a reasonable use of capital that will be outpaced by long lasting recurring revenue. So far insider and institutional buying is vastly outpacing any selling, which remains a good indicator to me. I believe Veritone has a tiny percentage of the TAM so far and I believe the TAM will expand rapidly over the next 2-10 years so I want Veritone to pick up as many of those customers as possible right now-- even at an expense to the company.

Gross Margins and other Saul Mentions
You mentioned gross margins are not a useful metric for SaaS companies-- again I don’t think you’re on the right board with that thought process. I’ve picked out some of Saul’s mentions from the knowledgebase as it’s pretty clear where he, and this board, stand.

From Saul:
I really want high gross margins.

I look for rapidly improving metrics like rapidly dropping losses as a percent of revenue or increasing profits if they are already profitable, increasing gross margins,
rapid customer acquisition, improving cash flow, dropping operating expenses as a percent of revenue, etc. If some metrics aren’t improving (S&M as a proportion of revenue, etc), because management says they are taking advantage of a greenfield opportunity to gobble up all the recurring revenue customers they can while the getting is good, I generally approve, but want to see those revenues really growing.

I look for positive and growing Free Cash Flow (FCF). If the company isn’t there yet I’d want to see progress in that direction.

Almost all of my companies are founder led, but I think that’s mostly because they haven’t been around for generations. I look for substantial insider ownership. I want the company executives to have the same interest as I do in the stock price rising.

Why have I “abandoned” PE as my most important criteria, and Why am I willing to invest in companies that are losing money.

As an investor, PE and profit was all you had to go on (besides hope). Finding a company that was growing revenue at 20% per year was great. NO companies had revenue growth of 40% to 60% on a regular basis. It was unheard of. It was something you couldn’t even imagine, except perhaps for a tiny company growing off a very small base, or as a one-time occurrence.

But then an incredible new world came along in which data, and Internet usage, and Cloud usage, and software usage, have all hit an inflection point and taken off, literally exploded. What these software companies are selling is actually currently needed by every company in every field, whether it’s a bank, a grocery chain, an insurance company or an auto manufacturer. It’s not going to go away. Every company now needs software, needs the internet, needs a website, needs ecommerce of some sort, needs security against hacking, needs to be able to analyze and visualize data, to analyze customer patterns, needs… well you get the idea.

And something amazing called SaaS was developed. It stands for Software as a Service: Instead of selling the software on a perpetual license, you, the software company, lease the customer your software, and the customer makes monthly payments “forever.” You have visibility for the first time in your company’s life, and your customer doesn’t have the large upfront outlay of cash. These monthly payments you are getting are recurring revenue.

You can update your software monthly, weekly, or even daily using the Internet, which keeps your customer very happy and very hooked, and keeps him renewing his lease contract every three or so years. Your software becomes an integral and essential part of your customer’s business. You can sell the customer additional programs, with new bells and whistles that your R&D department just perfected, or sell to additional departments in the same customer company, and your revenue from this customer will be higher next year than it was this year (dollar-based net expansion rate). This is referred to as land and expand.

Because of increasing spend by existing customers, and because of increasingly high demand for what you are selling from new customers, you may see revenue grow by 40%, 50%, or 60%, or even more, each year. This means that your revenue will quadruple or even quintuple in four years, or five at most.

Your margins rise with time because your monthly S&M charges for the recurring part of your revenue are miniscule compared to what you paid for the initial sale. You could make all your updates in the Cloud and it would be even cheaper, and cheaper for the customer too, as the customer doesn’t need to buy all that computer hardware.

This is still early innings. All companies out there need what you are selling but most of them don’t have it yet. You want to go all out to sign up as many of these companies as possible before credible competitors emerge on the scene. This means increasing S&M expense now. You know that while a dollar of S&M expense spent today is mostly expensed against your current earnings, it will bring in (expanding) revenue almost forever in the future. This incredible opportunity also means spending on R&D so you continue to have the best products to sell. But this is all new and greenfield, and the imperative is to sign up as many customers as you can, as rapidly as you reasonably can while still providing good service, and not worry about current profits.

Think about this for a minute. Every good-sized company now uses more and more software every year. They all want to be part of the cloud, they all need what our companies are selling, and most of them don’t have it yet. The opportunities are enormous, and once the software is incorporated in the customer’s business it becomes harder and harder to change providers… really a pain for the customer and a risk of all kinds of disruptions to their business if they tear it out, so they will need a really, really, good reason to change.

So our software companies have mostly recurring revenue, and not only recurring, but expanding recurring revenue as the old customers increase their spend (dollar-based net retention rate), and new customers sign on. This means that each year our software companies add lots of new recurring revenue. And they are growing at rates that will quadruple their revenue in four years. (Actually 50% compounded for four years will quintuple their revenue in four years, but I’m being conservative! :grinning:)

And that’s why I buy SaaS companies, that are growing revenue at rates I couldn’t have imagined a few years ago, and it’s why I don’t worry about them not making a profit now. My other criteria are still there: rapid revenue growth, recurring revenue, lack of debt, insider ownership, a moat, not capital intensive, not hardware, doing something really special, etc, etc, but I’m taking advantage of this new world.

I look for a company that has a long way to grow. A company that I can hope will at least triple or quadruple. I’d never buy a stock at $45 hoping it will get to $55. I wouldn’t buy a stock at $45 unless I though it could get to $150. That means a company that has a long runway. One that ideally can grow almost forever. What I mean is a company where the addressable market is so big that their share of it allows them to keep growing for the foreseeable future. That’s no guarantee that they will, but it’s better than a company that already has 40% of it’s total addressable market, for instance, and can only double once.)

I want management to be interested in making a profit. That’s why I sold out of Amazon some time ago, even though I loved the company. Making a profit just didn’t seem to be on Bezo’s radar screen. He never even mentioned it. Amazon just kept going up without me, but that’s okay. The stocks I put the money in went up too.

You mentioned EPS-- I never mentioned EPS in any of my posts as I don’t really think it’s very useful in these stages of growth-- but you insinuated that Veritone had somehow manipulated EPS with a massive dilution-- that simply did not happen. Outstanding shares was flat at 33Mil for all of 2021 and increased less than 10%. The only significant increase in shares was immediately following IPO, and as I mentioned, veritone has increased revenue by more than 500% during that time.

A Quick Recap:
Profitable on Non-GAAP basis with steady material improvement in operating expense as a percentage of revenue
SaaS Model in the AI space
48% YoY growth
120% DBNRR
80% Gross Margins
RPO increased 100% YoY
Employee Count increased 25% in Q1 2022
SaaS Revenue increased 78% YoY
SaaS customers increased 45% YoY
Immaterial and decelerating share dilution
P/S 2x

Some Concerns:

  1. Customer concentration-- Amazon is their largest customer from the PandoLogic acquisition and accounts for something like 30% of revenue-- However, non-Amazon customers increased 200% YoY.

  2. Management is interested in making more acquisitions to expand their customer and sector reach in an aggressive effort to grow ARR, however with only $250Mil in cash I see the potential for more share dilution ahead-- Again I’m personally not concerned with this as I have a longer-term lens to look through, I’m happy for aggressive expansion, as long as organic growth continues to grow as well (think

  3. Competition in the space-- I received an off-board response from someone who works in the industry and is aware of other larger players pursuing similar end goals in AI O/S that are stackable. I think there are a few possibilities-- the most likely to me is Veritone becomes an acquisition target itself-- to the likes of someone like Google (the founders sold previous companies to Google). Veritone could just be pushed to the wayside by larger fish and never be more successful than they are right now-- this is a scary idea to me, but I think it’s the least likely of these scenarios. Or, the aggressive growth and sector expansion now could reap healthy rewards as larger companies build sector and product awareness and actually accelerate Veritone’s growth further. This is the scenario I believe in-- As an industry grows and accelerates I believe the whole sec


Doh! Somehow I managed to strike a series of keys which posted my response before I could preview it or finish my sentence.

What I was saying is essentially all boats rise with the tide–

When the cybersecurity sector grows, all the players grow with it. I believe the same thing will happen in the AI/ML space and Veritone’s ability to touch so many sectors with its product suite (everything from advertising to energy) will only improve its ability to grow with the industry.

Veritone is not Microsoft-- they aren’t issuing large share buybacks and they don’t pay a dividend. If those are your interests, look no further than Microsoft-- the more important company in the world–

But I own plenty of Microsoft in index funds that I don’t have access to invest in individual stocks. Veritone is trading at 2x sales with improving underlying profitability. My thesis for Veritone as customers expand, revenue continues to accelerate and brand awareness increases is for it to conservatively trade closer to 10x sales.

Peace, Health, & Prosperity



Hi MillennialFalcon,

Im Kev, I’m new to the board, nice to meet you and I’ve been following yr posts about Veritone with another poster Saul and I was wondering if you could just ask you a question to help me clear something up that I don’t understand.

When you said the Veri is Profitable can I ask where you got that info from, as when I when I was looking at Veri, in May all I could see was large losses, for eg: 2021 was a Net Loss of -$70 Mil
and 2019 was a Net Loss of -$47 Mil. All I could see was that it hasn’t made any profit in any one year since starting 2014, all up it has Net Losses of -$330 Mil approx.

Am I missing something MF, or have I read the numbers completely wrong because I’m totally confused now and I hope it was ok to ask for yr help in putting me straight.

Thanks MF for any light you can shed I appreciate it and I’m enjoying yr’s and sauls posts.

Cheers Kev

Hi MillennialFalcon,

I went back to my notes on VERI from early May and reread some more and from my point of view and these are just my own feelings ok, I’m not smart enough to play the short, day trade game and I’m talking from a long term view, there was just so many red flags when you look deeper and read between the lines, there is just way too many to list here and thats why I didn’t buy in and to be honest MF, I simply don’t trust them and the more I looked the worst I felt.

They are always hiding the important numbers, the numbers I need to know, I know their sales look good when you first see the increases, but even those numbers are not True.

They are doing what I called in businesss, Buying the Sales, in others words their supposedly excellent organic growth from their AI software is not that at all, it’s padded out by their purchase of PandoLogic which closed in Nov 21 last year for $180+M and then they backdated and added in 7 Qtrs of PLogic revenue and earning figures to make it look good, which to me feels dishonest, it’s the same pattern repeating again and again.

The price for those fake rev numbers is going to cost them well over $180 Million plus, when you include the Interest, 15% GreenShoe portion and earn outs in the debt and all the while they are still loosing 70+Million a year.

The week that the deal closed their share price has collapsed from approx $32 down to now $7.50 a 75% crash And I might be really skeptical but the purpose of buying PL was to increase their own stock price and thats totally backfired on them and to make it even worse it’s going to cost them a min of $36.76 a share to settle the $180+M debt and it’s capped at $48 a share.

Another flag for me is they seem to have lost focus on their own core product which is their AI Ware OS, so now they are going to have 3 products, AI, AdTech and now HR and recruiting Software. I know from experience when you spread yourself thin over too many products and services it can really really hurt, especially when you add in the extra staff you have to put on, which means your own foucs gets spread even thinner and when the pressure is on to pay upcoming end of month bills, it can even bankrupt you, as it nearly happened to me.

There customer aquisition is also down a lot, from Q3 last yr to Q4 they only added 14 customers, customer revenue dropped from $4.9M to $3.4M, A 31% Drop which to me is another red flag, it should of been increaseing at that time of year.

I understand you were meaning Non GAAP on earnings now as I read yr post again, but that worries me even more again. They swap from Non GAAP to GAAP when it suits them, and they have never been profitable from day one and as I mentioned it’s GAPP losses are well over $300 Million and it’s going to get even harder for them now with all that extra debt and their stock price drying up right when they need the asset backing.

I don’t like the high and repeated amounts of all their Stock Based Comp, I mean it was $39 Million last year alone, that also hurts the shareholders. Why on earth would you pay yrself that much when you are loosing hundreds of millions. I don’t get it.

MF, I better stop now because I have probably bored you nearly to death already, my apologies but all that above is why I simply don’t trust them or their numbers and for me personally they are no where close to being a long term option, I feel they have lost their way and focus and going down the MA path might come back to bite them I feel.

Maybe some day traders can have some fun but I am nowhere near smart enough like I mentioned to play that game, I couldn’t handle the daily stress and I would be up all nite.

Thanks MF, Have a great day and chat soon.

Cheers Kev