Some arithmetic . . .
Brad, I checked Yahoo Finance currency tables, and one SA Rand presently equals just over sixteen cents (I think it has dropped against the dollar, like a lot of other currencies). So three billion rand is more like $500M (U.S.) Still real money, but not as much as $900M (U.S.)
One exchange on the conference call was over how much the IT division (i.e., IDT) was contributing to IDX revenues this quarter. The answer was, almost $1M. At another point, IDX indicated total DFR-200 unit sales at just under 250,000; I have since estimated sales in the past four months at about 120,000 units.
OK, that gives us a rough revenue recognition amount per DFR-200 + software, and it is lower than I would have expected. If we divide almost $1M by 120K units, you get about $8/unit in revenues. If we divide it by, say, almost 100K units (on the assumption that the 250K answer was to-date, and not to end of quarter), we get about $10/unit in revenues. How is that possible, keeping in mind that the retail price is at least $99?
(1) IDX shipping number does not represent payment numbers. In other words, units shipped do not equate to units sold to end users, but just units placed in channels. Using this assumption, the revenue/unit at the end user would be higher than $8-10 per unit, but the higher the number, the more are presently sitting in the channel still unsold. Not such a great answer. And/or:
(2) IDX is subcontracting out the manufacture of the devices, and not recognizing the revenues for the hardware, but simply a small licensing percentage of the hardware revenues. I consider this a good possibility, and estimate the hardware revenues at perhaps $20/unit, with maybe $2-3 per unit going to IDX as pure profit from the subcontractor. But then what about the other $25 or so in projected software revenues? Is that considerably lower either because IDT/IDX has made major price concessions to get the market underway or because the hardware costs are significantly higher than $20? Either is possible.
We can't determine which factors apply (and all may apply to some degree), but the assumption that for every unit reported shipped to a channel seller IDX must be getting revenues of anywhere from $25 to $50 is clearly wrong. |
