Hey all, I’m continuing with doing a portfolio review through video. I’ve included some of the companies I researched this month as well in the summary video. Any feedback is welcome.
I have posted some videos on Reddit and Astera Labs as well. There’s some new information in these videos on the latest investor conferences they had.
Here is a review on the Paymentus (PAY) earnings,
There’s a new company I have a small position in called Ardelyx (ARDX)
Thanks for the videos! I really appreciate your work here.
About three hours ago Biostem announced that they received an extension to file their Q4 report, to be provided by April 15th. Ok, waiting until the last minute to announce this doesn’t look good; but, I like the followimg as a reason.
Jason Matuszewski, Chief Executive Officer of BioStem, stated:
“We appreciate our shareholders’ patience as we navigate the final comment review process for our Form 10 with the SEC, a necessary step to finalize our financial reporting and complete our uplisting to Nasdaq. Upon completion of this process, we will announce the date of our webcast covering fourth quarter and year-end 2024 results.”
Bolding is mine.
Any thoughts?
Best
Jason
I ended up closing my position at a big loss. It’s not a good look for them to announce a filing delay on the exact day they were expected to report earnings. They trade pretty low volume and on the pink sheets which makes it pretty risky already. Keep in mind they are reporting for Q4 of 2024. I just cannot see why they wouldn’t be able to announce earnings or their file their forms for results which go from October 2024 to December 2024.
It is a possibility the delay is because they are getting some things in order for the Nasdaq up-listing and I may be missing a lot of upside. I think it was not a great idea by management to time this announcement right on the earnings date. Why not announce this ahead of time is my main question.
I think I also made a mistake not trimming this one earlier as I had been thinking to do but didn’t act on it. I’ve been torn on this investment though because usually strong fundamentals win out in the end, but I just had too many questions and concerns at this point. There’s also a number of other companies with beat up shares prices, so I don’t mind reallocating here.
Hi Wpr!
Thanks for the monthly review. I really enjoy your videos, and your disciplined approach to strategy is a great guide for me.
I have two questions:
Aren’t you concerned about Pay’s margins?
And regarding Alab, what are your thoughts on the US sales trend?
Best,
Pablo Ahlers
Perhaps I should have bolded this part of the quote. I believe this is the most important part of the release because, as I understand the process of uplisting, the ‘final comment review process’ is after all questions have been answered by Biostem, meaning NASDAQ is unfortunately slowly wrapping up things here, suggesting that the uplisting is a ‘done deal’. IMO, Biostem was expecting to hear word imminently, hence the last minute pause.
That’s all a lot for anyone to risk any size investment into such a small company, even talking about it here makes me feel like I’m betraying some loyalty to Saul’s investment advise.
Biostem is 1% of my Holdings, at this time.
Best
Jason
Appreciate the clarification there, and I totally see what you are saying. My decision to sell now may look quite poor if that’s the case that they are about to up-list right around the corner.
I would have expected the price action on the company to be going the other way though as opposed to trending down each day. For example, if word had leaked they were going to get up-listed it may be getting bid up. However, it’s trading down again on the filing delay and the CEO’s statement. I get he can’t preannounce the up-listing though. I could be completely wrong on this one.
Thank you!
Most of Pay’s revenue comes from transaction fees which are low margin. That does make them quite a bit different than traditional SaaS, even though Paymentus does have a SaaS component. Margin has been trending down because the company onboarded enterprises faster than expected these past two quarters, and the larger companies get a better rate.
When I compare this company to BILL, the metrics are quite a bit different. BILL has an 84% gross margin, but their operating expenses make up a huge portion of revenue, while Pay’s operating expenses make up a much smaller portion of revenue. Typically I’ll put more weight on net income and EBITDA, over gross margin and operating cash flow metrics. Despite Pay having low margins, the small operating expenses allow them to get to profitability.
I haven’t seen much geographic specific information on Astera Labs, but a good portion of their revenue does get recognized in Taiwan. From what I’ve been able to tell US based AI data center spend seems strong still whether that’s word coming Astera, Marvell, or the hyper scalers. Was there some specific story about US sales trends recently?
Wpr,
Thanks for the clarification regarding Pay’s margin structure and model.
With Alab what caught my eye was the annual US revenue dropped from 30m to 11m. Could be a recognition thing or timing but it stood out - especially with all the noise around the sector lately.
Quarterly US sales look like this, beggining March 23’ ending december 24’:
5.4
6.2
11.4
7.6
0.9
4.5
5.4
0.6
Best,
Taiwan must be the answer, where sales have soared.
Thanks for your time!
Best,
Pablo Ahlers
@WillO2028 I changed my mind and decided to start a position in BioStem again albeit at a smaller size. Typically filing delays are almost always bad news but in this case I do think the explanation the company gave can make sense as you mentioned. They are now scheduled to report earnings on April 14 and I’d like to see what they report.
Looking at the financials, the quarterly revenue is almost as much as the market cap, with the company being profitable and having a 96% gross margin. Although the risk is very high on this company and there is a binary type of event with getting up-listed or not. I agree this is not a typical Saul style stock, but I still find the risk/reward to be attractive at this current level.