Interesting reaction from the market with the share price down 21% on the day the results were released. Share price has continued to fall since and is down below $2 at end of trading March 4. In looking at the financial results I always start with financial statement, first Cash Flow Statement and work my way back. I am not long or short Cettire.

Cash Flow Statement:

1. Impressive incease in cash receipts from $41m to $119m. This phenomenal growth piqued my interest in Cettire. So why did the market punish Cettire?
2. Operational cash flow (OCF) increased from $8.6m to $12.3m. Nice.

Nothing to NOT like in the cash flow statement. Now onto the Balance Sheet

1. I focus on changes in working capital, particularly inventory, trade receivable/payable and borrowings.
2. There was a signifcant reduction in working capital from $30m to under $16m. The main reason for this reduciton in working capital was a substantial increase in trade payable from $18m to $42.8m
3. The OCF of Cettire was NOT as impressive if we take this into account.
4. Total equity (net assets) down $8m so we already know they were loss making by $8m

Now onto the P&L

1. Nice increase in gross profit from $11.3m to $24.7m
2. But this nice increase in gross profit was heavily negated by MASSIVE rise in expenses
3. Marketing/Advertising increased from $3.8m to $25.9m
4. Merchant fees increased from $1.8m to $5.4m
5. These two expenses combined rose $25m from last year

The financial statements are looking at the PAST but can give good insights to how the company is performing and may perform in the near future. The increase in advertising and marketing may have the intended affect in the future (accelerating revenue) but I would like to see some scale/operating leverage.

Market may be thinking likewise