At a quick glance, Aerometrex’s announcement from today looks pretty good. 

• Essentially, they’re guiding for first half revenue growth to be aligned with ARR growth at roughly 20%
• They’re saying EBITDA growth will be anywhere from 76 to 130%

How much do you have to pay for this? A pretty damn cheap valuation it appears.

At close today the market cap is $24.70M. Remove the $10M in cash they’re telling us they have and you’re left with an EV of $14.7M. They’re performance tends to be skewed to the second half from larger government contracts, but even if it weren’t, that means an EV / Revenue multiple of ~0.6. Sounds too cheap. 

There’s a few problems though:

• In a market where most investors have completely forgotten about micro-caps, no one gives a shit about EBITDA.
• Last year showed EBITDA of nearly $4M, and that led to a loss of about $6M. I haven’t done the work to understand why the gap is so large, but am willing to suggest this supports my above claim that investors will likely want to see what the real bottom line looks like before they get excited. 
• I’m also not 100% sure I like the ARR reporting here. The presentation of their full year results shows ARR ended at $7.6M, not the $7.3M they claim to get these growth figures. 

On the other hand, a business with an EV / Revenue multiple of ~0.6 doesn’t need to get everything right to start moving, and maybe this is only the beginning to the new MD getting down to work. 

I know other members know this one well, I’m keen to hear your perspectives community!