20/03/2024

Re-running the numbers to align with the lower end of their new multi-year guidance gives:

2028 Revenue: $70M

(effectively pushing the revenue out by another year, or alternatively as dropping their revenue CAGR to ~20% from 2023 results)

Dropping their GP margin to 63% and assuming 2028 OPEX of $29M gives:

2028 EBITDA: $15M

Assuming 274M shares and a P/EBITDA of 10 =>

2028 Share Price: 0.55

discounting at 10% =>

2024 Share Price: 0.38

Yet again, it seems cheap IF they can deliver what they say, however if they keep dropping their guidance, well... In addition, they are borderline on needing a capital raise.

If either of these (capital raise or lowering of guidance) happen in the next year I will no longer use their estimates as part of my valuation - instead will us more conservative assumptions, but for now I am prepared to give the new CEO the benefit of the doubt as he finds his feet.

Also - despite me giving them a lofty valuation - I am currently not buying. I will hold until I see how this next half plays out.

Older

Upon revisiting this - I don't see any reason to change. Will be interesting to see these year results to see how on track for this they are though. All signs seem positive, let's see if the numbers actually come in.

Based on their guidance of 70-100m revenue in 3 years I have assumed 70m revenue by 2027 so taking the lower end and giving them longer to get there (this corresponds to a CAGR of ~30%).

Assuming constant GP margin of 65% and a 20% CAGR in operation expenses (to 29m which is 50% higher than their estimate) gives $17m in EBITDA (works out to be 24% of revenue)

Applying a 10x multiple to EBITDA and assuming 270m shares in 2027 gives:

2027 share price: 0.63

Discounting back at 10% -> 

2023 price: 0.43

So it is at a good price IF they can achieve what they say.