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By Steve Moore | Tuesday 6 March 2018
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.
Remote meetings technology group LoopUp (LOOP) has announced results for the 2017 calendar year, emphasising “we are very pleased to report continued strong business performance ahead of market expectations at all key P&L levels. Our track record of consistent revenue growth in excess of 30% has been maintained, gross margins have improved further and LoopUp EBITDA has grown by 161%”. EBITDA is though, of course, bullshit earnings so what’s the real story…
On revenue of £17.5 million, EBITDA is stated at £3.5 million - but there’s then depreciation + amortisation of £2.4 million. The cash flow statement then shows more than £4 million of ‘investing’ spending. It’s thus again a case of who does EBITDA expect to pay for this? The tooth fairy?
The company argues; “our differentiated product and competitive positioning are not only winning clients; not only keeping clients; but also helping us to grow clients into key revenue contributors over time. When combined with our efficient distribution unit economics and size of market, it makes for very exciting times here at LoopUp. 2018 has started encouragingly with some major recent customer wins set to roll out, and we remain confident in our ability to deliver continued strong growth.”
However, this is from 2017 even after a £0.9 million R&D tax credit and also £0.9 million of new equity seeing just a £0.7 million increase in net cash to £2.9 million – and this all comparing to a market cap, with the shares currently above 360p, of over £150 million.
As such, this is a growth story I’ll continue to monitor but the valuation at this juncture sees me still bearish on the stock currently.
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