Trakm8 Share Discussion Threads

[trakm8fan] 16/11/2020 13:36

Tricky question. We know covid has been around and this will skew everything therefore it depends what they say. I'd like to see something positive.

[trakm8fan] 16/11/2020 12:46

Not sure why everyone dislikes me. Perhaps because I disagree with everyone except Mouse. Discussion here centres around one simple question - will this make money. We only have a week or so to wait for their forward looking statement which will hopefully tell us. I can wait. I've been invested here only since 2015 or 2016 time. So not as long as others. I remember the price dropping and dropping. It hasn't really moved much since November 18 when it fell from 65 to around 15p. Anyway lets see what the results look like then we can debate it some more. I'm still confused why everyone is focusing on half the revenue and not the other. If this is recurring only then where does the other 10m come from. It is still my view that companies if paying as low as £3 per month should or could or its likely they are paying an up front fee as well. That might explain where this extra 10m is coming from. The bears have given no indication where this magic money comes from. Maybe the magic money will just increase magically and this business will become a magic money making enterprise.

[michaelmouse] 16/11/2020 11:42

Post 5407 - I was paying for shares in the low teens back in 2011. All well documented:-



I know why you dislike me so much. It's because I sold half my holding at prices between £2-£3.50. You were probably one of the buyers, and you blame me or think somehow you were duped when the share price sunk back to the low teens 9 years later. So does that make you the greater fool?

It won't be any consolation to you I know, but I sold half my holding because they'd multi-bagged and it made sense for lifestyle reasons. I've kept the other half and am disappointed with what's happened (I was hoping that their momentum and performance would continue to improve). However, I'm still very bullish and could easily see it rising and even surpassing previous highs. That's the excitement of micro-caps.



Stop blaming others for your misfortunes and move on. That's my tough love advice.

[6jacko] 16/11/2020 10:29

Omg MM and Trakm8 fan are the politicians Trakm8 use to defend the claims on here but we all see through it, you guys are just like Trump completely in denial and we know where that has ended.

We post facts and figures, genuine facts and figures and Blondie and I know more about the industry as we both work in it and live and breathe it every day.

Only option is vote Trump out or in this case the 2 Watkins and then hopefully someone could come in and rescue. Whilst they are here is a dead duck!

[trakm8fan] 16/11/2020 08:44

Mouse - revenues are derived from the sale of the actual units, installation charges and monthly fees (per device) after installation - yes - sale of the actual units and installation charges - one off up front fee - monthly fees (per device) after installation - recurring revenue.

[michaelmouse] 16/11/2020 08:18

trakm8fan - Telematics companies revenues are derived from the sale of the actual units, installation charges and monthly fees (per device) after installation.

At the last reported results (March 2020) Trakm8 revenues were 50% sale of units and installation fees, and 50% recurring revenues (monthly fees per device).

Sale of units and installation costs are low margin. Recurring revenues are high margin. That's why the installed base of units figure is so important.

If you look at QTX you'll see that their recurring revenues (installed base) makes up more than 80% of their overall revenues. It gives them gross margins around 65%-67% overall. So despite overall revenues not dissimilar to Trakm8 these recurring revenues give them profitability and comfortable FCF. It's the reason that QTX has a market cap more than 20 times greater than Trakm8 presently, but you can see the potential for Trakm8.

That's where we want Trakm8 to head in the medium term. As pointed out, installed devices are creeping up again for Trakm8 which is good news. Also good news is that at the interim stage, Trakm8's gross margins had improved to 60% (excellent), costs had reduced and as a consequence losses have greatly reduced.

The greatly reduced losses are chiefly because the high margin recurring revenues are currently a greater proportion of overall revenues. These high margin revenues are gold dust.

That's why I believe that trakm8 is a recovery play. If they can improve the financial performance then expect a share price many multiples higher, if they can't then it's highly likely interested buyers will compete to buy them. This is just my reasoning.

[andre] 16/11/2020 07:08

Trakm8Fan - Quartix are not ‘losing’ customers. They are stepping away from what they once made money on - which is now unprofitable. You don’t make money on a £3 a month unit with nothing upfront.

No matter what you write, the next set of numbers from Trak will be awful. Then you will try to roll that in glitter too.

[trakm8fan] 16/11/2020 06:18

Blonde - SAAS is an acronym. You can Google what that means. Domt get it confused with acrimonious. It means software as a service. This is where you provide software as a service and customers pay on ongoing recurring fee for this SOFTWARE a bit like you would do for any other SERVICE. Trakm8 provide software - yes - but the little box of tricks we call a tracker - what's that - is it software - no its hardware. They are not selling HAAS - I made that up - hardware as a service. So it is my belief that trakm8 sell their hardware on the simple basis where you pay for it immediately or up front. Then you pay an ongoing recurring fee for the software. Perhaps this explains why they have 10m revenue from recurring and 10m from somewhere else? No one has explained where this extra 10m is coming from. Everyone is talking about the 10m recurring revenue. Thats only half the story right. Come on people. There is a big elephant in this board and its got 10 million written all over it.

[trakm8fan] 16/11/2020 06:06

Andre - Quartix are losing ins customers and trakm8 are winning them - this you say is bad news for trakm8 - I say this is positive for trakm8.

[andre] 15/11/2020 21:37

trakm8Fan - You like facts. Let’s look at some.

Trak lost a lot of customers this year through lockdown. Source -TrakM8.

Trak are moving to insurance heavy balance. Low/no margin (when all costs take into account).

Quartix are a serious company in the space. Resourceful, well funded, very profitable. Yet they don’t see a future in insurance. That should tell you a lot. If you think Trak can do better than Quartz then you absolutely no nothing about this market. Quartix are superior in every way. And they see no point in wasting resource on make work, low return business.

Your entire reasoning for being bullish resides in then ‘scaling up and selling a lot more’. Except themes haven’t managed so far and now have no sales people!!

I’m checking out. There really is no point in pointing out the errors in your entire argument.

[dave2608] 15/11/2020 20:48

Andre

I'm talking about revenue in my calculations not profit. I realise costs have to be taken off those revenues.

[trakm8fan] 15/11/2020 20:31

Dave - we know trakm8 switched to SAAS model a few years ago. Perhaps some of the older fleet deals are more front loaded than ongoing recurring revenue. £3 is not good if you don't have any other revenue unless you scale up massively. But recurring revenue is only half of their income.

[trakm8fan] 15/11/2020 20:28

Andre - if cheaper units from competitors are rubbish thats obviously good news for trakm8. I dont see how it can be bad for trakm8. If your competition is rubbish then you win. Surely I don't need to explain how that works. We know trakm8 are winning new deals with ins companies. Even blonde says quartix are leaving ins company space. Again I see this as good news. Other companies leaving this space and failing with poor units. Thats all good news for Trakm8. Where has this information come from that Trakm8 units are failing. We know they had some problems with the new rh600 but there has been no talk about problems with any others. Not from Trakm8 themselves that I know of. Direct line renewed a couple of years ago. Why would they do this if they were seeing lots of failures. That makes no sense. RH600 failures is not great but that's newer bleeding edge technology. Not the bread and butter ins co stuff Trakm8 have been doing for years and years.

[dave2608] 15/11/2020 20:21

Solutions, licenses, hardware, camera sales? I'm not sure exactly.

[andre] 15/11/2020 20:18

MM/dave- you are both obviously talking about revenue here in your calcs. Profit comes after all costs including maintenance. If these are not reliable then the maintenance/replacement cost makes it look a lot worse. Fleet customers are being lost due to failures and poor repair times (meaning downtime for vehicles whilst the units are fixed/switched. How good the insurance unit is is anyone’s guess.

I’ve mentioned before that we had two in our family. One from Trak Global and another from a different supplier. Both were insurance and both were unreliable. This doesn’t mean TrakM8’s is bad, but it goes to show that cheap units may well be unreliable.

Finally on churn. They already told us how much they are losing due to their Covid explanation. That doesn’t bode well for upcoming numbers.

[trakm8fan] 15/11/2020 20:13

I thought revenue was £20m for the year. If recurring is only 10. Where has the other 10 come from? If they have churned 100000 - for simpler maths - of the 168000 ins / auto then thats roughly £100 each. So perhaps this is up front money paid on top of recurring. Its coming from somewhere?

[dave2608] 15/11/2020 19:59

You'd think it was less than £3.33 for insurance / auto. Even less than £3.00 in fact.

Calculation for ins / auto customers at £3.00 168,000 x £3 x 12 = £6,048,000

£9.8 million - £6,048,000 = £3,752,000

£3,752,000 for 77,000 fleet leaves £4.06 a month for each fleet customer. That can't be right. Fleet surely wouldn't be as low as that.


Let's go with the scenario of £6 for each fleet customer. 77,000 x £6 x 12 = £5,544,000

£9.8 million - £5,544,000 = £4,256,000

£4,256,000 for 168,000 insurance / auto customers = £2.11 a month for each insurance / auto customer.

It's probably somewhere inbetween the two scenarios but it doesn't look exciting does it?

[michaelmouse] 15/11/2020 19:17

In all seriousness, there are one or two interesting areas for discussion. The £3 per unit per month (that the bears keep quoting) doesn't come from any insider knowledge, but from a simple calculation that they've made. In the March 2020 Finals, the recurring revenue was £9.8m. Recurring revenue is directly correlated to the installed base which was 245,000. So £9800000/(12x245000) = £3.33 per unit per month. It's a very crude calculation but does emphasize why the connected base is so important. It's a semi valid point about churn because although the installed base had increased by 2000 devices over the year the recurring revenue had dropped by £0.3m. Explained as follows,

"Recurring revenue generated from service and maintenance fees decreased by 3% to £9.8m (FY-2019: £10.1m) due to the reduction in Connections from Insurance customers earlier in the year, which were not offset by the growth from the newly launched customers towards the end of the financial year."

So ideally you want that churn to be as low as possible, and naturally that is easier to achieve with Fleet customers. However, as long as that installed base keeps growing then it's not a major problem unless churn is absolutely massive (in which case it'd be unlikely that the installed base would grow significantly). Also from the previous year the average price per unit (on the simple calculation) gives £3.50 per unit, so not much different even with no allowance for the churn explanation.

The £3.33 per unit per month figure is (as stated) very crude because of the fleet/insurance ratio and churn but I'll use it for a bull case.

What Trakm8 need to do is simple. Ramp up that installed base e.g. 300,000 devices at £3.33 per unit per month is £12m in recurring revenues, 350,000 devices is £14m in recurring revenues, 500,000 devices is £20m in rr etc. The big margins are on this installed base so if this ramps up in the next 2/3 years then Trakm8 will really prosper, if not I suspect they'll be bought out because their existing recurring revenue base is with blue-chip clients and that's very attractive.

[dave2608] 15/11/2020 14:16

Maybe it would be more appropiate to look at the recurring revenue?

[trakm8fan] 15/11/2020 13:59

Oh no we are back to this £3 per month number which is now apparently a fact. I don't believe it to be fact. I don't believe trakm8 are selling these things at £3 per month without any additional up front charges. I'm sorry the numbers don't add up. Its simple maths. They have 250000 connections now and showing £20m revenue. How does that work?