Trakm8 Share Discussion Threads

[dave2608] 02/11/2020 18:19

Oh dear here we go again in post 5282. Gross profit goes up linearly with revenue. For each £1 million increase in revenue there's an exact increase of £600,000 in gross prfoit. There really are other variables in play that you need to account for. At least you've conceded that overheads wll rise. Have you factored in the rising debt figure into your model?

[dave2608] 02/11/2020 18:11

Michael Mouse

Your projected figures in post 5281 for revenue, gross profit, overheads. How can you possibly just state these as written in stone fact? Gross profit goes up linearly does it for each linear increase in revenue? Surely other telematics companies are competing for that same increase in revenue. There will be downward pricing pressure. There'll also be competitive upward pressure on wages to employ the best salesmen, marketing people, data scientists etc in the field. That's how a market works. As for overheads remaning static in your model. Behave.

[michaelmouse] 02/11/2020 18:07

Thanks for the lesson Andre. I'm learning so much today. Isn't it much more complex than that though?

For example, if you invest an extra £1m in costs (say a top sales team) then it may well produce a significant uplift in revenues.

revenue £18m, GP £10.8M, OH 12M, LOSS £1.2M
revenue £22m, GP £13.2M, OH 13M PROFIT £0.2M
revenue £28m, GP £16.8M, OH 14M PROFIT £2.8M

Oh golly!! An even bigger profit. Sorry blue.

[andre] 02/11/2020 17:35

michaelmouse - lesson in economics.

You can’t just add to revenue without costs. Business doesn’t work like that. (Maybe whip the team harder or more often?).

If £18M revenue doesn’t produce a profit after cost have already been cut (because those ‘costs’ were either wastage - which means the business was being badly run before - or they were revenue enhancing - which means they will result in lower future sales)..... then £22M sales isn’t going to magically make the model viable.

Why assume you can suddenly produce more with less?

Sorry blue. Your logic is skewed.

[escapetohome] 02/11/2020 17:35

I think that is a very good question Andre and I gave you a tick up.

Of course the gross margin doesnt include overheads and as you rightly point out , marketing can be a huge huge expense for some companies, so we really need to know the net margin, ie what do they make after all expenses taken off.

I had this share on my radar, following MichaelMouse huge success with backing a certain media share Avesco i think, but never really tempted to dip a toe in here.

[michaelmouse] 02/11/2020 17:18

Dave you're back from the pound shop then that's great. Can you answer my questions in posts 5274 and 5275 now do you think. I'd be very grateful.

BTW did you find any d4t4 thingys or telematics devices. TIA.

[michaelmouse] 02/11/2020 17:13

Andre - "I would counter that if at 60% GP they can’t make a profit after expenses then the entire business model looks screwed."

Do you think so Andre? You see I was thinking that if they sell more stuff (increase revenues) then profits quickly ramp up if they control overheads? Can you explain to a trusting soul why that doesn't happen? Some made up figures but let's look at a simple example:-

revenue £18m, GP £10.8M, OH 12M, LOSS £1.2M
£20M, £12M OH 12M £0
£22M £13.2M OH 12M PROFIT £1.2M
£24M £14.4M 12M PROFIT £2.4M

So a £6m change in revenue would turn a £1.2m loss into a £2.4m profit. So you would say that's an indication of a screwed business model? I'd never thought of it like that before. How fascinating!

Andre - "Their trading statement also showed drops due to Covid(?)"

Yes I noticed that. The biggest drop was reported losses by 75% which I assumed was good?

I'm seeing the world of business in a different way though now thanks to your insights. I learnt two things today 1)Screwed business models are those with high gross margins that can rapidly turn losses into profits with any up turn in sales 2)If a company reduces reported losses then it's a red flag.

That's why you need experts on these bbs. It's just fantastic!!

[dave2608] 02/11/2020 17:09

I'll endorse what Andre says Michael Mouse and I'll add what they don't put through expenses. Check the balance sheet. Net book amount. In 2018 there was £7,520,000 of development costs parked. In 2019 there was £9,402,000 and in 2020 £10,711,000. (all figures as at 31st March). So you could very well argue that the results although dire have been made to look a whole lot better than they actually were.

[andre] 02/11/2020 16:43

michaelmouse - I’m not suggesting anything. It was highlighted that 60% GP was really good. I would counter that if at 60% GP they can’t make a profit after expenses then the entire business model looks screwed.

Their trading statement also showed drops due to Covid(?). Read into any of it what you will.

It’s all just opinion. You obviously are more trusting here. I base my view on their trading history.

If anyone on here knew then they’d be wealthy from trading the stock one way or the other.

[michaelmouse] 02/11/2020 16:11

Where's Dave gone? Dave if you're popping to a pound shop before lockdown please can you pick up a couple of those d4t4 thingys and three telematics devices? Cheers.

[michaelmouse] 02/11/2020 16:02

That's interesting Andre. Never crossed my mind that one. Wouldn't that be fraudulent though? Are you suggesting that they're manipulating their accounts?

You say, "If a 60% GP is so large then why don’t they make a profit?"

Gosh!! Could it be that they just need to sell more stuff? Is that possible at all? I have noticed that some companies with such large gross margins find profitability suddenly jumps in leaps and bounds when their revenues increase. I seem to recall it's called operational gearing or something like that?

You suggest, "Could be that some expenses are actually COS?"

Wow! but from their trading statement, gross margins had gone up 8% points to 60+% whilst overheads had reduced by 30%. That's weird if you're correct. It's a bit of a mathematical conundrum isn't it?

Any further thoughts would be greatly appreciated.

[michaelmouse] 02/11/2020 14:59

Also Dave I notice one of your favourites D4t4 has almost identical gross margins. I suppose that means it's selling its stuff at pound shop levels as well?

Gosh this is so interesting, I'm learning so much from you guys.

[michaelmouse] 02/11/2020 14:53

Are they Dave? Could you explain the significance of a 60% gross margin then? As a simple example if an item costs £1 to make then a 60% gross margin means they sell it for £1.60 doesn't it Dave? Or if they're pound shop telematics (like you say) then they only cost 62.5p to make. That's a substantial mark up Dave isn't it?

[dave2608] 02/11/2020 14:41

They're cheap. Pound shop telematics.

[michaelmouse] 02/11/2020 14:36

Gosh that's all very interesting but I've got a question that really needs explaining.

If Trakm8's products are not that special then I'm wondering how they are managing to attract and retain the likes of Iceland, Sainsburys? (not confirmed), the AA, Scottish Power, E.ON, Direct Line, Euro Car Parts, Ingenie, LexisNexis, Pendragon and countless other companies whilst achieving a gross margin of 60%? Odd isn't it?

I eagerly await your responses.

[dave2608] 02/11/2020 13:19

In an arms race, Trak are at the bow and arrow stage whereas Squarell have inter continental ballistic missiles. Would that be a fair analogy?

I've looked at Sqaurell's partners. One or two big names from the telematics world in there.

[trakm8fan] 02/11/2020 12:27

Andre - the AA bought this so it must do something and it must be able to do that something in a consistent manner across a range of vehicles which are typical to the UK market. Will it do absolutely everything a bespoke car manufacturer diagnostic machine can do - clearly not. Will it do enough to identify the basics - surely yes. Otherwise the AA bought a load of rubbish.

[6jacko] 02/11/2020 11:55

Andre you are right. All good tracking companies can read real Odo with an obd connection or a can clip like Squarell or others like Masternaut use. It’s nothing new , old hat and not a differentiator at all. Having deployed 4 tracking solutions recently in last 2 years it’s standard as track and trace and driver behaviour these days. I’ve heard Trak don’t do it particularly well, customer told me they had the wrong can patchs on and mileage was miles out. So guess simple for experts who know what they are doing!

There is nothing new here at all, lease companies do not value it or want to pay for it and customers won’t pay either and if they do it’s pence rather than pounds. I know one of the recent partners of Trak for leasing as we use them too and its £50 a unit and £2 for data. Bottom of the Barrel sales and margin!

Watkins clutching at straws. I’m told no real dev in last 12 months apart from trying to stable the RH600 overheating issue, unit falling off dash or failing to record oh and building a bespoke solution for Sainsbury’s of course- Nothing new then!

[andre] 02/11/2020 11:53

trakm8Fan - the whole 'warning light' and 'vehicle health' thing is the latest in a long line of overpromises to sell tracking. It is so manufacturer and model specific as to what data is available that unless collating that info. is ALL that you do as a company, there is no way to keep up with Squarell etc. who do precisely that. Manufacturers don't want to standardise things because it makes using their expensive aftersales services easy to replicate. Hence using the OBDII port gives some information on the above but most info. is simply not put out from this port.

Trak will likely be doing what so many others do. Claiming 'vehicle health and dashboard warning' yet only delivering a fraction of it on any vehicle. It's smoke and mirrors mostly. Read the small print on any documentation regarding this and you will see so many caveats you will doubt they actually deliver anything at all!

Ask them if they cover all warning lights and vehicle health info. on all vehicles. Then listen to the fudge of an answer.

Just IMHO.

[trakm8fan] 02/11/2020 11:45

Found it on their website. Just searched for trakm8 real odo and this came up - link below. It mentions canbus for car and light commercial. If you scroll right they have a paragraph where they describe something called true odo.

[trakm8fan] 02/11/2020 11:37

Andre - they must be reading Canbus if they can do vehicle health and dashboard warning lights. I'm fairly certain they do their own r and d for this and its all done in house and in England.

[andre] 02/11/2020 10:01

‘Real odo’ is simply reading of the odometer from the vehicle as opposed to getting mileage from the gps in the tracking unit. Is it a differentiator? No. It’s actually quite common for any company reading canbus data.

Canbus is a more expensive unit to fit than a standard tracking unit. Reading odometers from a range of vehicle makes and models is only possible with an expensive unit usually from one of a very few manufacturers (like Squarell) who spend shedloads on ensuring their units keep covering all new makes and models of vehicles that come out. Hence it is expensive.

If Trak are doing this with their own tracking unit then they are either exaggerating their coverage of vehicles (every make and model of vehicle will give the data in different formats which has to be programmed for) or they are buying a canbus reader in - from one of the few who do the R&D.

Does it matter to fleet owners? Yes and no. To the majority the answer will be no as the gps data is pretty close. Close enough to check mileage claims for example.

It’s more likely that Trak are using their OBD units to cheaply read from the vehicle’s diagnostics port. This has its limitations and only a very few vehicles will give odometer readings via this port.

Make of all of this what you will. As we use telematics in our business, I know a little bit about it.

[6jacko] 02/11/2020 09:39

Same old Gibberish we get fed