TEUM crushes Q2 Earnings

Hey guys I just got finished reviewing Parateum’s quarterly report. I’m not sure if anyone remembers them but this company was discussed on the board a few months ago. I unfortunately got in too early and have been holding half my original shares since then while they got attacked from a short sale report and went down to a low of $2 a share. Anyways, TEUM is a company that does similar SAAS business as TWLO but is much smaller and just beginning their growth story.

Today was their Q2 report and I have to say it was all around strong and they increased full year guidance. Here are the results:

SECOND-QUARTER 2019 FINANCIAL RESULTS YEAR-OVER-YEAR:

Total revenue increased 469% to $34.1 million
Income from Operations totaled $159,000
EBITDA increased 466% to $3.4 million
Adjusted EBITDA increased 369% to $6.1 million
Non-GAAP EPS of $0.03 (Non-GAAP EPS of $0.05 for the 6 months ending June 30, 2019)
Net Dollar-based expansion rate represented 151% growth
Increase in total assets from $33.1 million at June 30, 2018 to $246.9 million at June 30, 2019

RECENT BUSINESS HIGHLIGHTS:

In June, Pareteum Announced the Commercial Launch of Pareteum Experience Cloud™. A single source for the creation, delivery and rapid scaling of a multitude of API-driven communications experiences, the Pareteum Experience Cloud brings to market an unrivalled combination of service breadth, management control, and geographic reach
In May, Pareteum was announced to join the Russell 3000 Index at the conclusion of the Russell U.S. Indexes annual reconstitution

2019 FULL-YEAR GUIDANCE:

We expect revenue to be between $120 million and $130 million for the full year of 2019, an increase from the previous forecast of between $115 million and $125 million. Adjusted EBITDA and Cash Flow, net of restructuring and acquisition costs, will be positive for the year.

We expect 2019 revenue growth in the range of 270% to 301% year-over-year, outpacing the market growth rate by fivefold, and to be updated quarterly.

“Pareteum achieved several significant milestones in the second quarter: We grew revenue 48% from the previous quarter, delivered EBITDA positive results two full quarters ahead of analyst expectations and our annualized revenue run rate eclipsed $136 million,”

Now the company’s CEO is Hal Turner, the short report that went out a couple months ago related him to another company that had some type of fraud, I’m fuzzy on the details but it has certainly limited this stock from appreciating.

My hope is after such a strong quarter and raising guidance that the market will finally start to give TEUM some love.
I bought back my original shares I had sold and have a small 1% position for now.

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It sounds like TEUM are racking up some huge wins for partnerships/customers.

Looks like Google is partnering with them (“largest Internet search and advertising company in the world”)! I hear this is for their service called ‘Google Fi’

https://fi.google.com/about/?gclid=CjwKCAjw7anqBRALEiwAgvGgm…

Also a global fintech company…

Continuing now with the strength of our customer relationships, I’m pleased to share with you some of the things that are driving visibility to demonstrable growth through our sales efforts. Here’s some of our key Q2 success wins. The largest Internet search and advertising company in the world will use our Experience Cloud and Smart Network Wi-Fi for its MVNO brand, enabling expanded coverage and secure connections for its subscribers. A U.S. global fintech company will use Pareteum Experience Cloud and Smart Network for global connectivity, serving as the Wi-Fi backbone for their solution and their sister company, which is an MVNO, will use Experience Cloud’s Smart Network to launch service in the U.S.

Transcript:
https://seekingalpha.com/article/4282394-pareteum-corporatio…

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One note on YOY revenue growth - I think that growth is so large due to acquisition of iPass and Artilium last year so its not organic but nice to see the beat and raise.

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Oh I didn’t dive deep enough to realize that. The stocks getting sold off today on a positive day for the market, obviously a lot of geo turmoil so that could be do to people de risking their portfolios. It’s so hard to tell with a small cap like this where major Wall Street doesn’t cover them.
The google relationship is huge, it validates them as a real player in the space. I certainly was concerned about the operational aspects inside the company and with company management so this is good to see.

Pretty balanced article on TEUM.

https://seekingalpha.com/article/4283696-pareteums-blowout-q…

Bottom line is that he thinks it will take a couple quarters to prove out the story.

Price/Sales of about 3x. So that is probably for a reason, which may be trust of management. If management delivers over next couple quarters, could be a big winner.

Currently around $3 in pre market, ~15% drop from earnings / $3.60.

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Here is a different view on TEUM. I have no position either way. But it sounds like regardless of bookings, they seem to have cash flow issues…

https://seekingalpha.com/article/4288112-pareteum-caught-cas…

I would tread carefully in the meantime.

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