Damien...
>>Wouuld you or anybody else like to predict your expectations about future earnings?
<<
At the risk of exposing my ignorance, I will take the first crack after looking at the Q1 and Q2 results and doing some projections over the last half. I am looking at this as a numbers exercise and using the first 2 Q's to set the stage for projecting the next 2 Q's.
Not being inside the company, I believe there are many, many things that can make my projections look very bad down the road. Nonetheless, this is my cut.
Revenue
SW 52M This could be a tad higher and I hope so.
Serv. 28M
total Rev 80M
Cost of rev.
SW 2.7M Very High margin business
Serv. 16.7M Very low margin business See footnote (1)
Total 19.4M
Gross Pro. 60.5M
Op. exp
Sales/Mkt 42.5M See footnote 2
R/D 13.7M See footnote 3
G/A 7.3M See footnote 4
Total Op E 63.6M
Income BT (3.1M)
Other inc. 1.4M
Net Income (1.7M)
EPS (0,06)/Share
Footnotes
1. I am concerned about the significant increase in the Cost of services as a percent of revenue Q1 vs Q2. It increased from 54% to 64% This could be a factor in profits by the end of the yr. The good news is that services are growing slowly. EXLN, IMO, could not afford to grow services rapidly!
2. Sales and Mkt as a % of Rev. is way way way too high! It is running at 53% for both Q's IMO this must get down to about 40% in order to really make some money. Since I do not see any change from Q1 to Q2, it does not seem prudent to expect a big change in the next two Q's. If it does, then EXLN will make some money. This line is a very BIG key to profitability!!!
3. R/D As a % of sales it is running flat at 17%. Being flat is not good for a business with increasing sales. I would expect it would be dropping. However, one must invest if you are going to keep pace. 17% however does seem quite high to me. I would appreciate comments on this.
4. G/A Why is this running flat at about 9%. Why is it not dropping as sales increase. This is pure overhead and q to q improvements are necessary. In addition, it seems to me that 9% is also very high in and of itself.
Summary...
Unless EXLN can find a way to cut a lot of expenses especially in the Sales/marketing and G/A, I do not have a lot of hope that 2000 will be the profitable year that some people on this thread including myself have been expecting.
I continue to trust in the comments of others, especially Damien, that their products are first rate. I continue to believe in the future of XML and its growth. Those two things combined give me confidence in the future but how long can we all wait?????
Appreciate any comments pro or con on my analysis. |
