I think (1) making a proposal to the government for funding (and trying to get said funding by offering reasons why commercialization is possible) and (2) making a PR to the public about a new product are two different things.
The CEO says in CCs that the cycle to bring these RMD things to market is lengthy. (read: glacial).
They are growing some segments organically and RMD continues to generate these types of things for possible commercialization.
If they just grew all segment revenue and had no way to invest in the future the stock might trade higher but they have a chosen way to invest in the future and it's Xcede. It would be a huge , high margin market for Xcede.
CEO seems to think they need to keep doing RMD. In football RMD is the "3 yards and a pile of dust" offensive game but you still take whatever the defense gives you. Right now it's mainly Xcede.
When asked at this year’s meeting, “What matters most at Berkshire Hathaway?” Charlie Munger and Warren Buffett quickly agreed: “Seeing things the way they are."
What I'd like to see is better sequential growth quarterly growth right away.
But higher margins will mean that when they hit the $39M in guidance they will bring more to the bottom line.
So if they raised guidance to $42 the stock would go up. But they kept guidance and the higher margins will mean about the same to bottom line.
Except, it will be even better.
Once nearly all AXGN sales people have the experience to be fully productive and the Physicians using the product watch-- over time how the nerves grow, revenues begin to really grow not just YOY but QOQ.
The high margins AND steeper rev growth will really kick in.
I also like what the high margins say about their competitive position. It's strong or they would not dare raise prices.
Can you say "hockey stick"?
Can you say, "big moat"?
Can you say, "recurring revue model"?
How about "zero customer churn"?
Qick recap: MD was sold to the first bank well before the necessary technology for end users--smart phones and it's adoption hit an inflection point and skyrocketed.
Just about everyone who used MD liked it right away even back in 2010 but that was not the final driver of hockey stick revenue growth.
MD revenue has to reflect rapid sales penetration to FI's, cautious, lengthy roll out of MD and widespread adoption of smart devices. Everything is finally in place for the hockey game ---including the last factor, cadence of big block renewals.
When we secured the sands of Normandy it was not the final goal. Bigger fish to fry for those with the wherewith-all to do what MITK has done so far.
Physicians get their feet wet with a few surgeries. Once the physician determines outcome she/he orders more.
However it takes a long time for nerves to grow.
Once good results are in, that part will be behind them, they will hopefully have the conclusive evidence to really take the plunge and it should hit a steeper growth curve.
Until then, we should have fatter growth but it will be but steadily progressing towards more explosive growth.
So it will be a bit like watching - not grass, but nerves grow until 2017 or so.
Bottom line is they have the products well patented and they are executing towards owning a big share of the $1.6B market.
going up--it's like raising guidance by $4M/yr.
This raising of margin expectations shows they have a strong competitive position.
Banks saved $2.5B. What has MITK made off MD since the first bank? Divide that by the 1B checks.
Clearly they have a lot of room to raise price per check.
You have very sticky customers--no churn-- who seem to be taking, almost a free ride.
MITK should hit them hard on the next wave of products.
FYI, there are a number of sites that report the number of page views and the number of unique visitors to a website. siteworthtraffic is good. Just enter clearag website name and get results. Recently the page views has tripled. But it's only about 120 page views per day and 50 unique visitors. I've been tracking it for a few months.
Run-up is to "price in" good earnings. If ER exceeds what's being priced in, it'll go higher after ER. If AXGN has good earnings but just meets what's being priced in it'll go into a trading range that reflects the facts.
If you are thinking of adding here, go back and check what happened on the chart just before last ER and the days and weeks after. It ran up in anticipation, then fell back into a range.
Bottom line is: revenues are building to a point way, way higher than where they are now and it's a good growth stock to be in, long term. IMO.
I think it's significant that in all the years this stock's been around, they chose now to go on the road.
It's a good buy at half book ($3.69), there have been may buys by insiders in the past at this level and higher and it may be a good time to at least think about backing up the truck.
I found this transcript at seeking alpha:
Q2 2014 Earnings Conference Call
August 14, 2014 3:00 PM ET
Hi guys. I have a question for you maybe it’s a question that Craig can answer or you Dr. Bates. ...the stock trades half of book. Obviously there was some confidence in the company because I see some of the directors buying the stock. Frankly I’m a little surprised that the Turkish director didn’t buy any stock in the private placement...
But in any case... why do you think the company trades at half of what I think its tangible book, if I’m not mistaken? And what can the company do to perhaps close that gap? To help close the gap, obviously I’m saying?
We have no knowledge as to why ...there is that that gap or imbalance between the two. I think what we try to do is run the company and manage the company as well as we can. And I think what we’re doing now would be the proton initiatives and as that takes effect, I think the value – you’ll see the value in the future increase above what the book is, because I think there are a lot of people that have been waiting for a number of years for the proton initiative to start.
In that I think each month we get closer to that happening. Now we’re within 18 months of first treatment at our first centers. So we’re very excited about that. And we’re hopeful that people will see the value in that. And it should increase our EBITDA significantly once we’re up and running. So, I think the metrics will drive the stock up, that’s our hope.
May sign 1-2 protons and 1-2 Gamma within next 8 mos. Going on the road to investors. Just needs a little more EPS. Orlando will help with that in 6 mos. or so. All multiples and comparables other than EPS are great, or will be great once the EPS is there. Been picking up shares.
BTW, there's a new book out on Amazon about how proton will "revolutionize cancer treatment". GLTA
I think the business model is similar to a "search fund", with Xcede the target.
Here's an article:
Search funds are financial vehicles typically set up by one or two people to raise money from investors toward searching for—and eventually acquiring—a small business. In one sense, they might be loosely described as micro–private equity firms, except that unlike Bain Capital, the average search funder isn’t looking to make a quick profit off buying, gutting, and reselling a struggling business. He’s interested instead in taking a shortcut to the top of the management ladder and staying there for the long haul.
Usually a search fund buys a non tech, existing businesses with existing sales but DYSL is going after a business with a pretty amazing potential for sales revenue.
So they are both an incubator and a search fund. They don't have the funds for Xcede so, as a search fund would do, they have to be "set up to raise money from investors".
As an incubator, DYSL can run the Xcede business until the value is such that they can hopefully cash in at a greater amount than the costs involved. Looking at ARTH, they have moved along to where the value has recently doubled.
So this is a long term and fairly risky process. It's important to have success in the other segments.
I don't think it's a risky as what ARTH is doing-- with all eggs in the same basket. DYSL can exit and still go on as an incubator of such business like CLYC and anything else they may develop and they will go on with other segments.
I think the only thing we really need to worry about is that the strategy will actually work in the way they seem to think it will. We will probably have to hold about a year before we really find out and much happens with the share price.
ITI keeps a lid on profits because the "one off" money is going to ClearAg. But they are moving to another, globally scalable, high margin, subscription based, repeat business, '"toll collector" model and if it works, the multiples will be different when determining PPS.
They seem to be making progress, towards producing, really, a whole new segment backed by a lot of patents. To get EBITDA positive with ClearAG will mean a world of difference for the PPS. I just hope we get that stage of the game quickly and don't get excuses:
QUESTIONS AND ANSWERS
Jeff Martin - ROTH Capital Partners - Analyst
Andy, when do you expect some of the agricultural contracts to start contributing to revenue?
Andy Schmidt - Iteris, Inc. - VP Finance, CFO
Well, right now they do. And we are probably close to about the million in recurring revenue as we sit today. And again, what's a little bit hard
about recurring revenue models is that the recognized revenue takes a while to build. It's a bit of a waterfall look. So we look forward.
We went to market July, August, and our pipeline has been growing steadily. As I said, we've got over 20 specific contracts in eval, others that are
clear of eval and are in a closing process.
So what we are shooting for is get this business up to about $3 million to $4 million a quarter in recurring revenue. At that point, then the model
starts taking shape and you can start seeing the gross margin profile and the op income profile. That can come sooner than later. But we are looking
at maybe 4 to 8 quarters to really show positive EBITDA in this business without a lot of pull on our cash balance.
The PPS will often move 6 months ahead of the actual positive EBITDA mentioned above.
As the trusted authority in high-quality food and beverage manufacturing for 75 years, Lucerne Foods is the private label and co-pack partner of choice for countless household-name retailers, food service companies, distributors, and national brands.
Backed by a $57 billion dollar Fortune 100 parent company, Lucerne Foods is a world-class supplier with over 18 manufacturing plants spanning a breadth of categories.
We provide an unmatched level of collective industry expertise, manufacturing capabilities, and economies of scale.
ClearAG blog has a post indicating Lucerne or it's backer may be a ClearAg customer. Sobyes or Agropur may be the parent company but I'm not really sure right now. In any case according to the presentation at Roth, there are 20 or so deals in various stages. There's a transcript of the presentation now.
The legendary pop singer cancelled two shows on April 7 in Atlanta, citing the flu.
But TMZ is now reporting that it was a drug overdose that landed Prince in the hospital in Illinois on April 15, not the flu. The gossip website reports
Sources tell TMZ that Prince was given what the site called a “save shot” to reverse the effects of an opiate overdose. Naloxone, sold under the brand name Narcan, is a life-saving drug that is used as an antidote for opiate overdoses.
Don't feel bad. Hemingway Fitzgerald, Keats, Faulkner, Austen, Einstein,Churchill, JFK, Da Vinci, Yeats, Franklin.--they would all tell you, when assessing intelligence, don't put much too steak in spelling, because they were all poor spellers.