Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Whether one is deemed to have the "Wave bug", is optimistic or whatever is a subjective call. Anyone is entitled to their opinion. Facts are facts. The Wave sales dept. accomplished the single largest one order number of licenses sale in their history. 250k licenses for $2.3m is respectable by any ISV's standards and is as I said a step forward in implementing change in the company ie. wean off Dell bundling revenues and replace it with enterprise sales. Try as one might to trivialize the sale but it's a significant event.
And with just 7 biz days left in the Q1 quarter to be reported in early May--the lack of any real news nearly insures the Q1 may actually be worse than Q4 '14. The accumulated hammering and concussive power of all those bad quarters in a row, coupled with the new CEO's optimistic statements--may bring an end to the madness known as Wave before the year is out.
"Insures Q1 may actually be worse than Q4". With Q1 billings going up an estimated minimum of $1.8m over Q4, that statement is wishful thinking on your part.
The "hammering of successive bad quarters" you refer to is btw the result of Dell's continued slide to zero, in fact Q1's estimated uptick in billings of $1.8m allows for it going to zero. No matter how one slices it the $2.3m sale be it for a DP product, SED management or VSC is an significant step forward in executing Solms' strategy that includes selling to the large enterprise segment.
I was thinking the your cash number at the end of the quarter was about 1.5 too high, but that was assuming the 3.2M was going to be recorded over the next three years. my bad.
What you first said had nothing to do with the cash number at the end of Q1 as far as how the $2.3m would be recorded, you clearly implied Q1's SMB billings component would be minimum of $1.5m less than Q4's (which deducting approx. $600k for OEM billings was $2.3m) because of additonal customer buying activity that occurs in a fourth quarter. I didn't say that couldn't be the case, only that it's wishful thinking on your part to the tune of Q1 SMB billings being $800k or less.
I believe that some of the revenues you were counting on continuing from the 4th quarter won't be there because I have a feeling some of those revenues that were booked ion the 4th quarter may have been 1st quarter spending for some of those companies. I think you are probably a minimum of 1.5M too high.
I have used billings long before Solms and here's why:
I would like to point out that, that the way we book our license revenue our billings are often a better indicator of near-term performance because of the deferred nature of how we book our license revenue. So most of my comments are going to refer to billings rather than revenue.
http://seekingalpha.com/article/2978876-wave-systems-wavx-ceo-william-solms-on-q4-2014-results-earnings-call-transcript
I realize cash from a billing does not arrive the date of the billing and it can be a different quarter for example, I know, that's why the "basically".
Basically billings= money in the door
mmbg imo you are dreamin' about SMB enterprise billings being $1.5m less for Q1. Anything is possible of course, but wishful thinkin' on your part.
And btw don't confuse billings with revenue. Basically billings= money in the door whereas revenues is how billings are recorded as revenues basically. The $2.3m came in the door as cash all at once and will be taken as revenue over the three years of the contract. You should know this too; Q4 billings and revenue were each $2.9m, coincidentally.
Billings Q4 were $2.9m sans a large order. Assuming SMB licensing in Q1 is at Q4 levels $2.9m + $2.3m insurance co. sale= $5.2m. If Q4's $.5m Dell goes to zero Q1 billings (so far)= $4.7m everything else being equal.
No doubt about it. The $2.3m sale is a significant step towards Q1 CFBE with zero Dell.
The $2.3m order is the largest since BASF's $3.5m nearly four years ago. I wouldn't count on the same sales team not delivering more of them reasonably soon.
http://wave.com/buzz/pr/basf-selects-wave-35-million-agreement-protect-sensitive-data-corporate-laptops
Not much to discuss BF. Billings estimate thus far Q1= $5.0m an uptick of over $2m from Q4.
From the sounds of it you're counting on these maiden large VSC orders not coming to fruition. Good luck.
Could you define what you mean by "slippage in the schedule"?
I read in the 10K that Wave no longer delineates Embassy from Safend. If we assume OEM billings are $600k in Q4 and services are $300k that leaves $2.0m for products. We have no way of knowing what part of that is VSC.
We keep hearing 3-4 quarters sales cycles for large enterprise and obviously SMB is less. We are just shy of three quarters downstream from the product launch and that's for prospects becoming prospects immediately after July 22.
We know of one gov't customer and a reference in the CC of others closing.
As I stated in my last two posts the "dozens of pilots" was stated here:
https://www.wave.com/buzz/pr/wave-systems-announces-first-us-federal-government-customer-wave-virtual-smart-card-2.0
Since the Virtual Smart Card 2.0 became commercially available in late July 2014, Wave has entered into dozens of pilot deployments in multiple sectors, including healthcare, financial services, automotive, energy and utilities. However, today’s announcement marks the product’s first sale in the government sector.
That folks including myself took Solms "100 VSC opportunities in various stages of development" statement in the Q3 CC to be synomous with "100 pilots" is close enough imo. Fine if they hadn't all made to pilots at that point, all that matters is that a % of them become orders. Splitting hairs here as usual.
Thank you for the sales process perspective.
My point stands about the gov't customer PR that stated "dozens of pilots" which I assume were properly qualified, and that was over a month before the "100 VSC opportunities" first discussed in the Q3 call in November.
You said:
In the last concall Mr. Solms said the "pilots" are not really pilots. They are pipeline opportunities only.
I don't see the use of the word "pilots" by Solms in the last CC, nor do I think there's cause to deduce that a significant % of the "pipeline opportunities" haven't gone to pilot per the gov't customer PR.
You mean in the Q3 call when he thought the questioner was referring to technology partner pilots, not enterprise customer POC's/pilots?
The gov't customer PR in Q4 referenced dozens of pilots across multiple verticals so imo the matter of what % of "pipeline opportunities" today are pilots is a moot point. I never worked IT sales but I wouldn't think a prospect is in the "sales pipeline" until they at least do a POC or possibly even advance to a pilot.
tkc, I read that as either anticipating ones to close in that time frame and/or smaller ones have closed already.
Carrot dangling by the CEO?
Illusory references?
Yes or no?
From the Q4 CC:
I feel confident not only that other large enterprise sales will happen in the near future, but we know that many of them will be based on Virtual Smart Card sales, in addition to continued sales of our Data Protection Suite which was our last recent success.
Well I’ll share with you, but I can't. Okay because for once I guess we’ve noticed until the deal is done, you are never a 100% sure. And I'm glad that we’ve had a large success on the sales side. Because hopefully that adds some credibility to the comments that I've been telling our investors that the process is working and deals are progressing through the pipeline. I’ll tell you that as I look out at our pipeline, the growth is impressive.
The percentage of opportunities in the pipeline that are based on Virtual Smart Card or TPM sales in terms of revenue is approaching the 50% mark, and that's very impressive for as we launch products. One of the reasons I guess that you know it's potentially frustrating when you hear me talk about you know the strength of the pipeline and we’ve only seen one major deal closed so far is because these are large enterprise, the sales cycle is two, three and in some cases even four quarters.
So we know these deals are real, not all of the opportunities that start will complete and close. But those that do, we’ve been tracking for not just one [inaudible]. So we know about where they are [We can’t pin our finger down exactly when they will close, but we have a pretty good idea. And we have known for quarters that they were coming. So that's why I'm glad to be able to have a sale that's been released, so you can have some confidence that we are not just trying to talk about the sales which will never arrive.
I'm probably more confident in our pipeline now that I’ve been at any point since I’ve been CEO. I am particularly pleased with the fact that we were able to make a large sale of one of our legacy products and a huge portion of our pipeline going forward including some deals that are in the final stages are based on Virtual Smart Card.
But I'm pleased that there’s a lot of new companies in the pipeline that we haven't seen before and some big recognizable names which is nice to see. So I think that answered the new or replacement part of your question. Could you tell me again what the second half of your question was?
Yeah, so the good news on that one is really both. We’ve some large enterprise partners that are bringing customer opportunities to us. We actually have a number of large customers who have seen our marketing campaigns and reached out to us directly. And then we have some cases where our sales team, through their own business development activities are talking to the different customers at trade shows or et cetera, and are generating new leads there.
So we are seeing leads, we are seeing opportunities come in, in each of those different categories that are progressing. And in fact, we are seeing those activities begin to accelerate even over where they started which is a part of the reason for my optimism related to the pipeline growth and what we see in there. Now I believe we should be and have the capability to be performing at even higher levels.
And the pressure is on our sales and marketing team to continue to improve, and increase our--not only our pipeline growth, but obviously we need to start measuring closure rates and revenue growth, and we’re completely focused on that. Did I answer your question?
I think my comment back then was that, I had about a 100 different opportunities in the pipeline related to Virtual Smart Card that we were starting out with at any stage in the development. And some of those as we have progressed have not concluded in a sale. Some of them, and some of them have and in fact when you look at you know the fact that we launched Virtual Smart Card 2.0 in July 22nd, so it was at you know in the first third of Q3 of last year.
That's about right, and that's accurate and that the deals are nearing in the final stages now in terms of the sales cycle. And I would say that the good news is on that, although some of those hundred have not been successful, you know a certain core element of them have been; that we’ve seen actually larger interest in terms of creating new opportunities going forward. I just had a sales training session with our North American sales team earlier this week.
And we walked out of that having done a little research together with several new opportunities with you know Fortune 500 companies as the target, just at the end of that one-day session. There is, because of the nature of the security threat these days, it’s accelerating our sales cycle for a number of these large companies, and we’re seeing, you know when I typically say it’s often a two, three or a four quarter sales cycle for an enterprise customer we’re seeing many of the newer opportunities on a trajectory to close on the faster end of that continuum than the slower end. In other words, we’re seeing a much higher percentage of them close in the two to three quarters as opposed to the three or four quarter part of that timeline.
Ronald Meyer - REM Financial
Are you concerned at all about the possibility of Wave being delisted now by Nasdaq?
William Solms - President and CEO
Well, I am glad you asked that question, because I'm completely unconcerned about that. And there's only one reason why I could be, okay. We received a warning notice on January 15th, that means we’ve until July 15th of this year to trade for ten consecutive days above the dollar. And based on the opportunities that I am seeing and the confidence that I’ve in the size of the opportunities that are closing, the proximity of when I believe they are going to close, I'm not concerned about that at all, and it's based upon the non-public information that I am privy to.
I see you added that which is bolded to your original post. Anything else you'd like to revise or add?
There's nothing in the public domain that appears to demonstrate vsc progress. Except Solms' safe harbour. I'd rather rely on the arc of the numbers.
You're right, it would not be accurate to state as you first did "nothing to demonstrate progress" after the $2.3m sale had closed providing the first sign the large customer strategy is engaging. Also, is VSC progress really "nothing" when there is a gov't customer and others that have closed since the launch?
Q4 CC:
I think my comment back then was that, I had about a 100 different opportunities in the pipeline related to Virtual Smart Card that we were starting out with at any stage in the development. And some of those as we have progressed have not concluded in a sale. Some of them, and some of them have and in fact when you look at you know the fact that we launched Virtual Smart Card 2.0 in July 22nd, so it was at you know in the first third of Q3 of last year.
This you added to the end of your original post:
I acknowledge that he was careful not to forecast success. But he has moved the goalposts.
So you concur after all that Solms was careful not to commit to a BE date prior to the Q3 call? That was my complaint initially ie. that posters were claiming he stated a date from the all along when he didn't.
No I never implied Solms was a liar so you are wrong to think that.
After the Q3 words were dug up I reviewed all four preceding calls and could find only references to the "goal of BE/profitability" confirming my impression that he'd been careful to not stick his neck out and commit to a timeline he could fail to meet.
"Previously stated goals" could be the SHM or stated internally as I couldn't find a date stated per above. Perhaps when he stated the goal in CCs without a timeline he assumed people would assume the "logical timeline" and he confused that with actually stating it?
As noted before when this discussion was first staged it would be folly for anyone to not assume BE by year's end would be necessary to avoid another financing.
zen, hopefully this is a real pipeline vs. a Sprague-speak orders in hand one. In a real pipeline, prospects that go in and ultimately emerge a customer, in this case nearing 8 months after the product launch, will produce orders approx. 6-12 months down the road giving a large prospect that goes in today a late 2014 close assuming of course they become a win. Assuming the VSC 2.0 pipeline is legit, the last 8 months represent initial construction and growth with a few SMB wins along the way. The first large win is anybody's guess if indeed it happens at all, however Solms was definitive in the call last week that VSC deals are in their latter stages. As I said, guardedly optimistic.
I agree they need additional billings to the $2.3m order this month to make CFBE Q1. Definitely not unbridled optimism on this end. Guarded yes, unbridled no.
It's true that VSC 2.0 has not produced a lot of revenue so far.
Not to create an excess of optimism among investors/potential investors including yours truly but that $2.3m sale is an interesting development, even if it's not VSC.
As I said "coerced" was a poor choice of words on my part. The questioner was not "coercing" Solms.
Q3 CC:
But importantly I still stand by my previously stated goals for this year and I acknowledge that it’ll take some strong sales execution in order to achieve them. For those of you who don’t remember the goals that I stated from the time that I became CEO, the first was to become - to hit the cash flow breakeven point or the point between which we’d be cash flow positive, and then secondly to make us profitable in terms of our revenues.
"Previously stated goals for this year" was paraphrased by the questioner as "stated goals for 2014" and Solms went along with it. As I said, "coerced" was not the right meaning.
Q3 CC:
Yes, Bill, I just wanted to clarify. You had said your stated goals for 2014 were cash flow breakeven and profitability and you stand by that goal, I just wanted to clarify that’s what you’re saying
Some revenue from VSC 2.0 so far. An announced gov't customer and references to other non-material ones.
OK, I believe your position is that the CEO did not specify a BE goal "by the end of 2014" until the wording in the Q3 call. If so, I can accept that is your position. I do think the fact that Solms didn't mention a date in the preceding four calls, the last one of those occurring nearly a year after the internal goal was set, muffles the point about a timeline finally being referenced in his fifth CC.
I believe the phrase I used was the "unintentionally coerced". There is a difference. Actually, the use of the word "coerced" was not ideal. I know the questioner and that was not his intent. Bad choice of words.
So for the record, I am NOT claiming the CEO was "coerced" into releasing internal information. Definitely not.
Delayed?
VSC 2.0 was launched July 22, 2014.
Touche.
Talk about hyperbole.
He didn't say it.
He did say it but later on.
He did say it and clearly states he said it before but he was coerced and didn't really mean it.
He did say it and he wasn't coerced but he really meant it was internal only even though he did say it clearly and reiterated it, more than once.
Is there something wrong with purporting in retrospect that a quarter earlier release of the new version of an important product might have resulted in an internal target being met? Not excuse making for the company, just a simple proposition.
Perhaps you have an issue with the target being cited as "internal" when your contention is that Solms publicly stated a BE date when he became CEO and repeated it every CC?
The internal target that Wave set when Solms became CEO in Q4 2013 for BE by the end of 2014 may have been easier to meet had VSC 2.0 been launched a quarter earlier. It would have helped too had the company been restaffed more quickly with personnel capable of effecting sales in the large enterprise segment. It takes time to find qualified people and then for them to become acclimated to a new environment with it's own unique set of challenges.
Initially I conceded the Q3 CC Q&A answer quote to player1234 but subsequently rescinded my concession indicating that the questioner unintentionally coerced a date of out Solms when he'd been careful all along to keep the target date internal. In fact if one listens to comments in the call last week it's evident the target was internal, an internal projection.
After the product launch, Solms set the goal - and thereby the legitimate expectation - that 5-6 months was enough to secure not just a deal but a dealflow.
Please provide quotes. I thought it was more like 3-4 q's (9-12 months) quoted for large enterprise sales cycles and less (implied) for SMB. SMB has already delivered and some within your 5-6 months.
So if the pipeline does end up producing it would imo cast doubt on your 8-9 months of nothing statement. You may counter that you meant sales, but retrospective of significant sales does not the first 8-9 months of the building of the pipeline that produced the sales amount to something? Note I said "if the pipeline does end up producing".
With all respect, there never has been nor will be a gov't "customer".
You must have missed this:
http://www.wave.com/buzz/pr/wave-systems-announces-first-us-federal-government-customer-wave-virtual-smart-card-2.0
Saying 8-9 months of nothing is a stretch imo. Not only is there that first gov't customer but in the CC is a reference to some prospects having already closed, presumably SMB. Although the stated shift in strategy is to focus on the large enterprise I assume they are taking some SMB customers along the way.
I can understand your requirements for the solution to prove itself in sales, perhaps many millions of dollars, before acting to call it a success or not a lemon. That's fine, no argument. Each investor has their own thresholds.
Cheers.
Sounds like the
i'd say there is now a rebuttable presumption that it's a lemon.
could stand after the first large order for VSC.
mmbg, you are persistently making a case that Wave has little potential going forward and whereas I agree the investment remains speculative there are some positive signs with the recent $2.3m large insurance company sale being one of them. Kinda shoots down your contention that due to reputation that companies shy away from doing business with Wave.
Actually you reference Samsung and other partners and not having deals in place. I'm surprised you focus on OEM relationships when the stated strategy is to target large enterprise customers. Wave is finally almost completely weaned off a significant OEM contract (Dell) that the previous CEO sat on for many years in lieu of developing a deployable TPM solution and yet here you are talking about more OEM partnerships. Go figure.
At least with the Micron OEM partnership the partner is funding development work (to be later reimbursed if it results in Wave revenues), meanwhile the company is pursuing the most important line of billings growth, enterprise sales with a focus on the large customer, large billings.
The first large customer order may satisfy the burden of proof or not depending on one's prerequisites.
"Rebuttable presumption that VSC 2.0 is a lemon". I shall have to remember that.
I agree, however I'm making the assumption that in the time since Solms has taken over that more or less everyone has figured out that results, sales and nothing else will drive the success of the company.
The only validation will be on the sales ledger. Everything else is staring into the pretty lights to the right so u forget to pay to what really matters on the left.
I think everybody knows that.
The stated strategy is to focus sales on the large customer and the insurance company order even if it wasn't VSC or SED is the first result for the strategy. Obviously it requires a steady stream of multiple large orders every quarter for it to be deemed successfully engaged. I don't think anyone needs reminders on that either although it's understandable imo it will continue to be stated here and elsewhere moving forward.
No ISV's have ever taken market share. Just kidding.
So far TPMs have not been widely deployed by customers. The issue is not one of ISV vs. OEM solutions, it's one of adoption. Look at Wave's history with Dell. Tens of millions of machines shipped with the Wave license and practically no adopters. The fault was Sprague's for not going to market with a deployable enterprise solution into Dell's gigantic base of enterprise customers. Now all the major PC OEMs provide their own TPM interface or plug into the Windows one and it's still up to the OEM or an ISV such as Wave to find large enterprise adopters. If you believe Wave's VSC pipeline has any value then they are one ISV engaging the process.
The interoperability I was referring to was general. Any area, not just TPMs and SEDs and not just Dell. ISVs provide solutions to enterprises. Many customers have mixed OEM environments so unless an OEM management solution works on other OEM platforms which they generally don't, the customer turns to an ISV for the solution. As I mentioned, ISV solutions also tend to be more specialized and fully featured than PC OEM management solutions and they are generally designed to interoperate across different OEM platforms.
snackman, cypher is claiming a TPM backdoor but let's see if he/she can explain how it would work. In order for a Chinese hacker or any to gain access to a network where only TPM-secured devices are permitted access, the attacker would have to spoof the private keys out of the TPM. Good luck.
Currently few networks are restricted to only TPM-secured known device access with PwC being one of the very few. When these are more widely deployed we'll see if someone figures out how to spoof the keys out of the hardware.
It needs to be known that Dell bought Credant for their encryption technology including SED management and that they had zero TPM management. What made Credant unique for a time was that it wasn't FDE where all data including the OS is encrypted, instead it selectively encrypted only specified files and actually Safend Encryptor is similar in principal. At the time that was a promising idea and Credant was fully venture capital funded.
http://www.credant.com/docs/CRE00467-CREDANT%20Solutions%20Whitepaper_Web.pdf
An issue PC OEMs have in pushing their management solutions on enterprise customers is many customers have multiple OEM environments and OEM solutions are generally not interoperable with other OEMs. This is where ISVs come into play. ISV solutions can be deployed in mixed environments and are generally better featured.