I agree. With large payments coming up to both CASEE and MIG in Q2 (CASEE payment is $3.5 million and MIG is a whopping $28 million). I think what's happening with the share price is people are expecting a dilution here as a result of these payments (MIG payment is payable in cash, shares of stock in VELT or a combination of the two at Management's discretion).
However, isn't it possible a dilution is avoided assuming they start collecting on their Trade Receivables outstanding? According to Q4 earnings report, Trade Receivables stood at $110 million and they had said that 58% of this stood to be due to Velti within 1-90 days (ie due in Q4). That means that if they have a 100% collection rate, they will be converting $63,800,000 (.58 x $110 million) of receivables to cash in Q4. Even if they collect only half of that total, that is still a cash in-flow of over $30 million. Factor in first payment for divestiture ($3.5MM due when transaction closed, expected to be Q4) we're talking a cash infusion there between $30MM and $67MM, respectively.
This is the kind of thing we need to see out of this eanrings call. Continued bullishness on revenue growth and cash concerns need to be alleviated. if it turns out revenues will grow at 30%+ annually here out and cash situation gets resolved without shareholder dilution, we're right back above $5 in my opinion.
Like your thinking. However, I would add that it's important to see margins as well. As it is CFO Ross' first earnings call, I still would allow him to clean up a few things. But, yesterday looking at short interest, I was amazed to still see 16M + shares sold short, where my estimates were around 12M. I tend to believe that short sellers are the smarter money compared to me.
But then again, revenue compared to market cap, EBITDA, earnings per share,... I give Velt the benefit of the doubt.
We'll know in a couple of hours time where we all are!
CFO seemed pretty certain they had enough cash onhand for near term payments like the ones you described. On analyst day, when this thing tanked, it was because the CFO was being upfront. He honestly stated that they need to focus on customers that can provide cash quicker. His emphasis was on increasing FCF at the expense of EBITDA (which is completely irrelevent). Everyone knows its all about FCF anyway. If they announce dilution, this thing will tank bad. Conversely, if they state that they have plenty of cash to meet near term obligations, and are expecting FCF to increase "well into the positive" (thats what he said on analyst day), this thing will pop like bacon in the pan!!!