Altitude Share Discussion Threads

[sheep_herder] 08/12/2018 21:08

topper, you're looking at the potential and working back by the sound of it. The company is clearly telling us that the reality is far from the potential. That's what I'm concerned about. I used to model the way you do until the company gave us the half year update. The presentation you're talking about sure does look rosy.

If you are taking the average annual revenues, even assuming a 50% penetration, that is clearly very attractive but nowhere near reality.

The SCSW $40m is the current yearly run rate which somewhat matches my best guess of the weekly run rate of $863k. $40m/52=$769k.

[opodio] 08/12/2018 21:06

opperlaser18 Dec '18 - 20:14 - 1317 of 1325
Model 274 members using end 2018 and 65 on-boarded each month in 2019 with your cost base, a GTR of 3.5% and an assumption that each member only uses 50% of the time give 11p of eps. Role into 2020 with a higher GTR of say 4.5% with same cost base and
monthly numbers gives 20p. Personally think gtr will be higher as more supplies signed up and that a member will use (more as linked into quick books etc more and more) more than 50% time. Not really sure I understand your point re weekly throughput either - it was 487k is now 675k which is 39% - exit rate would have been higher than the 8 week average. Seems to be growing fast, valid proof of concept and be a cheap equity.




Nice. Real Nice.

[john09] 08/12/2018 20:48

There will be another update in January so you can all put your calculators away

[northwards] 08/12/2018 20:45

I think we'll be achieving $2m per week sales throughput by Feb/March. As I've said previously, a relatively small fund raise is probably required to accelerate growth ... these are exciting times.

[topperlaser1] 08/12/2018 20:40

I told you how my model works and what it spits out re cash flow / eps. Let's see where Finncap get tofor 2020. I am not sure what SCSW are talking about re $40m. If you model 240 distributors for the full year off their annual average revenue ie where they are now - see company presentation - you get $158m throughput. you then have to work out how much they capture and at what gtr rate and then how many they new members they onboard each month through 2019.

[sheep_herder] 08/12/2018 20:33

Topper, I'm not having a laugh but I'm not using a model, I'm using the current numbers the company has given us.

Do you agree with my comment for break even needing $6m/week at the end of 2019? That has come from the company via SCSW if we are to believe them. The current weekly increase is of the order of $55k, calculated from the 8 week average of $675k.

Let's say there are 57 weeks until end of 2019, then 57*55k = $3.1m. Add on the current $863k and you get to nearly $4m.

When does your model compute they will see break even?

[topperlaser1] 08/12/2018 20:25

I trust my maths - you must trust your maths. What I wrote is how you should model it.

[sheep_herder] 08/12/2018 20:20

topper, that may be true, but they're accounted for as one business. It doesn't matter where the costs are. Take the costs out if you like, the numbers they need are vastly bigger than where they are now and aren't currently ramping quick enough. That may change. Or it may not.

Edit: and obviously if they can bring NAPCO online then it all changes again but I'm just going on the numbers they're presenting.

[topperlaser1] 08/12/2018 20:18

Last one - the cost base you quote from the interims is the Group cost base not the US cost base. The technology development and the ADP print business and Channl UK all have costs. I am not sure one have been told the US cost base. Wow behold facts getting in the way of your ramblings.....

[sheep_herder] 08/12/2018 20:15

If we believe SCSW and the $140m break even number, that gives an annualised weekly run rate of $2.69m. They're currently on c.$863K so over the next 57 weeks until the end of 2019, they need to exit the year with weekly sales of $6m just to break even.

[topperlaser1] 08/12/2018 20:14

We both know the 2019 downgrade was closure of the legacy UK exhibitions businesses. The core GTR forecast for the US was not changed. Model 274 members using end 2018 and 65 on-boarded each month in 2019 with your cost base, a GTR of 3.5% and an assumption that each member only uses 50% of the time give 11p of eps. Role into 2020 with a higher GTR of say 4.5% with same cost base and monthly numbers gives 20p. Personally think gtr will be higher as more supplies signed up and that a member will use (more as linked into quick books etc more and more) more than 50% time. Not really sure I understand your point re weekly throughput either - it was 487k is now 675k which is 39% - exit rate would have been higher than the 8 week average. Seems to be growing fast, valid proof of concept and be a cheap equity.

[stephen1946] 08/12/2018 20:13

Mellon, the company gave very good reasons why Alt will never join USA market. Ask you mum to go back and read it for you.

[opodio] 08/12/2018 20:05

I’d hope they get all the aim business and become 3x bigger than 4 imprint which was 1950p last I looked

[opodio] 08/12/2018 20:02

675k a week x 52 weeks is 35million

From nowhere to that in weeks. Wow
Shake it!

[sheep_herder] 08/12/2018 19:53

northwards, how do you work out $1m/week? We've just been told that the last 8 week period had an average of $675K and the 8 weeks previous was $487K. That puts the month up to 18 Nov at c.$863K. You've got the start and end points of an 8 week period so you can easily work it out.

That's not exponential growth. That's linear. They're not accelerating as they seem to require the staff to hand hold the on-boarding process which is why they've admitted they need more staff. This business model isn't working the way they thought it would as it needs too much hand holding.

Sure, they'll probably get to the point where they have everyone on-boarded and if they can get upwards of 3% then that would be quids in for all of us. But the current numbers are clearly telling us that isn't going to happen soon. However, they seem to be quick to react to issues so I hope they turn it around.

[sheep_herder] 08/12/2018 19:39

topper, a percentage can look good but the real numbers are those behind it.

A 46% increase in ordering members sounds great but they're starting from such a low number. You need to look at the absolute incremental numbers which are an increase of only 76 in the two month period. Unless they can substantially increase that rate then even with the additional staff, that's only 62/month. I'd expect 2019 to start with 278 members ordering and ramp up to a maximum of 1022.

The cost base is a simple extrapolation from the numbers Peter Hallet has given SCSW this month. The H1 costs were £2.8m so perhaps I'm a bit low at $3m.

So yes, it's proof of concept but they have a long way to go before they get anywhere near break even. They're telling us this. This isn't something I'm making up so unless this last two months is a downwards blip, they'll need cash soon.

After the last update the broker reduces their 2019 EPS target. I'd expect them to do the same again.

[john09] 08/12/2018 19:13

I think there’s chance at someone taking this out or a USA listing

[northwards] 08/12/2018 18:35

I think a relatively small fund raise is more than possible ... but it will be for the right reasons - accelerating growth.

[robbnw] 08/12/2018 16:28

Agreed northwards and topper2019 looks set to be a real turning point Just look at how the share price has started firm despite the general market SCSW gets in SheepTake a look again You have it wrong I feel

[northwards] 08/12/2018 16:17

Not the way I see things sheep. In fact, I believe orders processed is now about to break $1m a week - that's exponential growth. The prospects here are phenomenal and we are begging to show genuine proof of concept. Alt could prove one of very few success stories of 2019.

[topperlaser1] 08/12/2018 15:00

Typo - tech costs reside in UK not US

[topperlaser1] 08/12/2018 14:59

Feel compelled to reply as not sure you have read what I read! RNS 27th November shows a 46% increase in ordering members. With 55% of those ordering members having ordered more than 5 times. Proof of concept. Does that not show the members like it and the members use it. The key is surely that? Re cost base not sure how you compute that - as far as I am aware they have not revealed cost base or budgeted cost base - $3m US cost base with 15 employees is an average wage of $200k - not sure rent high and all tech costs resides I thought in US. As an aside I note average white collar wage in the US November 2018 is $56k. Finally on boarding or in progress / acquisition in demo shows lots of members want (I think) but the key for the company was to deliver as I said above growth in ordering members - very decent repeat orders - very impressive, show GTR - signed suppliers increasingly being on boarded. Proof of concept.

[robbnw] 08/12/2018 13:40

Personally I think you have read it wrong sheep My own opinion of course We will see ....

[sheep_herder] 08/12/2018 12:36

Is there no one who has looked at the numbers and thought it's not such a good update?

To me it looks like costs have increased to over $3m and at the current rate they're increasing the number of ordering members, they won't be at break even until well into 2020 at the current GTR.

If you look at the stats, although they've got a large increase in members at the demo stage, the number of on-boarding members is flat which suggests they're at capacity in terms of the support team. Hopefully there'll be a linear increase in that as they move from 14 to 23.

On the plus side, the GTR will increase as they get more than the 33% of suppliers currently contracted. However, even at the increased rate of 3.5% next year, and with a 2019 exit run rate of 1000 members, there's still a big gap in revenues to where I think many thought they were going to be. It seems to be very slow in turning interest into paying members.

I expect a fund raise by Q2 next year as they'll be out of cash by then unless they can get some sort of rolling bank loan. I'd expect they only need $1m to get through this phase. The full year results should show a flat to small reduction in the H1 loss as they increase the personnel count which will be slightly offset by increased weekly run rate.

My best guess is break even in 1Q20, or 4Q19 if they can up the rate of onboarding. So the 105p target by the broker looks fair to me. I was really hoping that this update would show an acceleration but it doesn't. Any fall off in the ramp rate is likely to be punished by the market so I'm still quite nervous.