AFFI Research Report (2 of 4)
WO RESEARCH REPORTS FROM MORGAN KEEGAN.
ONE DATED 11-5-97 AND ANOTHER DATED 11-19-97.
1 of 2 - Morgan Keegan Research Notes dated November 5, 1997
Q3 RESULTS SHOW SEQUENTIAL REVENUE IMPROVEMENT: ESTIMATES ADJUSTED FOR 1997
Affinity Technology Group (AFFI), announced third quarter loss of
3.3 million or (.11) per share last September. This was .02 better
than our estimate. Total revenues for the quarter were 1.7
million, within our range of expectations.
Item of interest during the quarter:
- Clients and Products - Revenues for the quarter include the
previously announced contracts with People's Bank of
California and Marine Federal Credit Union. People's Bank's
ALMs have the personal loan and checking account products
installed. Marine Federal Credit Union has equipped its ALM
with automated personal loan products and auto voucher loan
products. During the quarter, the company deployed an
additional 21 Automated Loan Machines.
- Dime contract - We believe the Dime Savings Bank contract
produced a material portion of this quarter's revenue and will
continue to be a major contributor to the top line. The
company disclosed that NCR Corp has been a significant
contributor in the Dime relationship and is providing NCR
kiosks to the company. NCR is also working with Affinity in
attracting contracts for larger banking companies.
- Revenue Components - Revenues of 1.7 million during the
quarter were up materially from last years 0.3 million. The
company did not announce any new major contracts during the
quarter, and on-time installation and set-up fees were the
primary contributor to total revenues. Barring any new
contract announcements, between now and the end of the year,
we would expect fourth quarter revenues, and results, to be
only marginally better than the third quarter. As such, we
are opening up a range in our Q4 estimate to (.05-10) from
(.05).
The company balance sheet continues to show liquidity. Affinity
ended the quarter with 33.6 million in current assets and 2.1
million in total liabilities. Cash and short-term investments were
27.7 million, or approximately .96 per share. Shareholder's equity
was 42.7 million, or approximately $1.48 per share. The company
currently has 28.837,376 shares outstanding.
While we observed a delay in many of the lending products in the
second quarter, those products began to produce revenue during the
third quarter. As we have mentioned previously, the relationship
with NCR could be a critical alliance for Affinity in its efforts
to sell the products to larger banks. Additional revenue increases
are expected, but not yet apparat, and are difficult to assess at
this point.
Investment in these shares is of a speculative nature, with a
revenue ramp-up and new contracts essential, in our opinion, to
achieve profitability. |
