I'm working on the numbers.
You are right on the Maintenance fee; I mis-read the License fee for the DecQ. But still we need to consider the ISSCO purchase in analyzing these numbers. The jump could be due to ISSCO?
I'm trying to understand the two trends driving this business; the number of subscribers and the revenues per subscriber. From what I can see, the revenues per subscriber is dropping rapidly and will continue to drop.
I looked at the Processing Revenue for last summer prior to the ISSCO purchase, I get about $80 per subscriber per year, based on the most recent Q run rate and the most recent number o subscribers. Now I know they had a big drop in their subscriber rate late last summer, but I am still getting about $71 per subscriber currently. This is still about $6 per subcriber per month.
Look at the numbers for next year (revenues, % electronic commerce, and # subscirbers)from the conference call summarized in Charlie Smith's post #323:
techstocks.com
By this time next year, I estimate about $60 in annual fees per subscriber, which is only about $5 per subsciber per month. This drop apparently will counter most of the growth in subscribers, so the Processing revenues over the next year will only grow about 10%. If the average annual fees drop to $50, then we could see additional downward pressure on revenues.
Of course if they hit 2.75M subscribers in one year, the run rate in revenues will be considerably higher, about $41M per Q versus $31.8M now. So what will probably happen now, is that for the next several Qs we should see flat revenues from Processing, as the drop in fees counters the growth in subscribers. Next year the growth in subscribers will start to drive the revenues higher as the average annual revenues per subscriber stop dropping.
The ISSCO deal was completed on Jan 27, so the MarQ had only about two months worth of revenues from the ISSCO operation, while the JunQ had three months. Clearly without the boost from the addition of one month's revenues from ISSCO this last Q, the Processing revenues for this Q would have been down significantly.
I will try to refine my numbers, and repost. The good news is that at the current market cap, the market cap per subscriber is down to about $600 per subscriber from $750-1000 a year ago.
Paul (long on CKFR) |
