Transaction growth is over 25% sequentially, and it has been accelerating. They have only released this metric for the past 2 quarters, but it is VERY significant because of the way the recognize revenues.
They sell blocks of transactions to channel partners, and book the revenues up front. Channel partners in turn sell to banks, who then begin systems integration which lasts around 6 months. Once the bank completes systems integration, launches the service and uses the transactions, they have to reload. So sales were pretty strong when they sold initial blocks of transactions, but went flat during systems integration and initial launch. As of last Q, they had 544 signed institutions, but only 205 had yet launched the service. As more banks launch, use their transactions, and return to buy more, the transaction growth and revenues will converge.
That probably won't happen this Q, but it will likely happen this year. So estimates in 2H are likely too low. Plus, USB and JPM should be launching Mobile Photo Bill Pay soon, which provides a new revenue stream. Probably a double-digit stock by year-end.
Seems like the real issue is the size of the "transaction blocks". They have been doing this for almost 2 1/2 years withour a substantial increase in quarterly revenues. That sort of indicates that the transaction block they sell is two large and/or they are underselling it to get customers. Kinda like selling each transaction at negative -.01 cents per unit and making it up on volume. When are they going to show some revenue increase. Even if you take away all the expenses for R&D and Sales/Admin they do not show a significant profit. However, management is sure taking a larger share of the pie with bonuses and salary.
It seems like the play on this stock is a takeover or buyout by one of the channel partners.
So based on your analysis... you're admitting that these great things won't be reflected on the earnings thats upcoming right? unless I am misunderstanding you here; you are making a long term argument for this stock which i never questioned. My only question is reasons why one should hold for this earnings, rather than get out, and get back in after earnings at a lower price ( preferably)
Of course nobody knows, but isn't the point of investing to sorta look at the positives and negatives and then sorta put a % on whether you think it will be good or bad? and based on those percentages u decide whether u shud hold or not hold thru it... u think people who 'play earnings' just 'roll the dice'?