By Steve Moore | Wednesday 8 March 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
A 2016 results announcement from remote meetings technology group LoopUp (LOOP) includes “we're very pleased to report strong business performance and a positive outlook in our first set of annual results as a public company”. So why are the shares currently more than 3% lower, at 156.5p, in response?
The results announcement follows a January trading update which emphasised a more than doubling of EBITDA to £2.1 million on adjusted revenue 39% higher at £12.8 million.
Further emphasising though that EBITDA is bullshit earnings, the results show after depreciation and amortisation a profit of £0.4 million – this though still comparing to a £0.4 million loss in 2015. However, as “the group has begun investing some of the IPO proceeds in sales, marketing and product development initiatives”, there was £1.85 million (2015: £0.5 million) of capex in excess of depreciation+amortisation.
There was then a £1.2 million (mainly working capital) net inflow before new financing, with year-end net cash £2.2 million.
The announcement also included that “taking into account all losses, shrinkages and growths, LoopUp revenue from all customers of at least one year old actually net grew in FY2016 by 8.3% (FY 2015: 6.7%)” and that “we're confident in the experience-led differentiation we've built into that product over the last 11 years and its ability to continue to take share from the large players in this £5 billion market. Looking ahead into 2017, we continue to see strong demand for the LoopUp product and are confident in our ability to deliver further growth”.
However, this all compares to a current £64 million market cap – with the shares still comfortably ahead of the 100p August IPO price. I’d want to see more compelling evidence of ability to, sustainably, generate material net cash before paying this up and, for now, continue to monitor from the watchlist.
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