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I'm not pissed because they had to raise more money. I'm pissed because they explicitly told us in Dec that their funding was "more than sufficient" to get to the point of positive operating cash flow. So either they intentionally misled us, or are unable to forecast their cash flow for one Qtr. Not sure which is worse.
I've listened to every CC for the past couple years and they have never taken a question from an individual investor. I've inquired about asking questions myself, and was essentially told they wouldn't take my questions during the CC. If I'm being honest, that's probably a good thing. Try contacting Andrews directly if you want to give it a shot (maybe I'm just on the black balled list LOL).
Unfortunately, we can't expect any tough questions from the analysts. Will be all softballs and zero follow-up re all of the BS fed us in prev calls.
I hope I'm wrong, but I'm expecting a lower Qtrly connected asset total and total rev to be flat to slightly down from what we had in Q4. The important thing is that the "over-time" rev continued to show at least a $1M increase over Q4. And most importantly, we need to hear that the restrictions are lifting and that they have already begun ramping up their rate of connected assets in Q2. They need to be connecting at a 7.5K - 10K a Qtr pace by the 2nd half of the year. If 15K fans can pack into MSG for the Knicks game yesterday, then they should be able to get engineers into buildings in NY.
Well, it makes even less sense to me that he'd be doing it pro bono, but little makes sense to me about this co. anymore.
I don't know Prime, I find it very hard to believe that mCloud obtained the services of someone who has been barred by the SEC to promote their recent debenture offering. I've been fooled by these guys before though, so who knows.
100K sh bid at $.92 in the OTC. Been awhile since I've seen that.
Prime, maybe we should have bought DRIO ... LOL.
Went back and looked at the original PR announcing the debentures, and it included this bullet at the top
"Closed US$2.798 million convertible debenture with significant participation from existing US shareholders"
Now, like Prime mentioned, I can't imagine that the existing shareholders who bought the converts were all too thrilled about the secondary that followed on its heels. We're all familiar with the risk that convert holders will short the crap out of a stock with impunity knowing they can convert and cover. However, given the conversion price of these bonds and the lack of short interest (on the OTC at least) that doesn't seem to be the case here. So, I'm wondering if the intense selling pressure we've seen for the past month is perhaps somehow related to these convert holders and their existing shares? Can anyone think of a scenario that would make sense here? I mean dumping their shares to try to tank the stock in some kind of revenge spree doesn't make any sense if they're not short.
Prime, How do you know
that Caserta was part of the PP? Also, I don't think the final tranche of that 8.7M ever closed (at least they never announced it). I don't think it's a stretch to suggest that the final tranche not closing and the overnight offering are connected.
I agree but it's tough to glean much from the "zero lost customers". They have mostly 3 year contracts and the only contracts that would be rolling over thus far are ones like the BOA contract that were via acquisition and are practically gratis.
Also, regarding the lack of insider buying, do we know for sure that insiders were not part of the convert offering? I'm not sure what the disclosure requirements would be there. Would have been a good way for them to get in with some volume and pick up 8% along the way.
Yea, this is something I've considered before. If you're recognizing 20% of the rev up front with no cash collection, then your monthly cash generation should be 20% higher than your MRR. Something to keep in mind going forward. If they are generating $10M/qtr in MRR by year-end, they should be generating $12M cash/Qtr from those contracts.
That's a very good point. It might explain both the boost in connections over Q3 and the big jump in the MRR/asset number.
... should be noted that the company is only using $70 MRR in their 500K asset 5-yr projection in the investor presentation.
They've already demonstrated Q/Q recurring rev growth of $2M between Q3 and Q4. I'm skeptical they can maintain the same level of incremental MRR/asset that they recognized last Qtr, but at slightly higher connection rates it is certainly possible to maintain the $2M per Qtr growth. Here are the Qtrly numbers it would take:
5000 assets at $133 MRR
6000 assets at $111 MRR
7000 assets at $95 MRR
8000 assets at $83 MRR
Yea, but we're talking about "Mr. $70-72 Million" here. The fact he didn't answer that question with a more definitive answer with only one week left in the Qtr was telling I thought.
You're right though. I'm probably reading too much into some of this stuff. Need to just step back relax and wait for the Q1 call. The losses are getting to me.
This was McMeekin's response to the analysts question re Q1 revs during the Q4 CC:
"It's a good question, so what I don't have a good feel for is, in March, how much billable technical
services we did, because we saw we got a little bit above $1 million in Q4 in technical services. We
started off January, it’s like—December, everyone got excited, Jack, and then it was like, January,
everyone shut down again, so technical services went from things might be getting better to almost zero
in January; so it started picking up, literally, I don't mean this to be joking, but Valentine's Day is when
we actually saw pickup in activity again, so we won't have the benefit of January being overly billed from
a technical services point of view, which is the projects line. Obviously, the recurring revenue is the
recurring revenue, and we are connecting assets at the back end of March. So, is it going to be down? I
don't think so. Could it be about the same as Q4? Maybe. Could it be up? That's our goal."
The highlighted part caught my attention. Why just the back-end of March? Perhaps he meant "accelerated" in the back-end of March. Also, having only done $1M of Proj Serv rev in Q4, why would that be the main concern on whether you would top Q4 revs? Take Proj Serv to $0 in Q1 and you should still top the total rev number based just on recurring rev growth. And let's face it, McMeekin ain't the sandbagging type.
It's possible they have changed their policy on releasing that data, but they have released those connection numbers prior to the Qtrly report for at least the past 2 Qtrs (Q3 released on 10/13 and Q4 released on 2/3.)
So, according to today's PR, mCloud IS receiving sub revenue from the US utility program participants + incentives from the utility co. So perhaps this program will deliver a higher MRR than C$50? Who knows.
I hope I'm wrong about this, but I'm continuing to get the feeling that Q1 was not good from an asset connection standpoint. They are still using language like "... restrictions may be beginning to see relief in certain regions." Shouldn't they be past that by now? And we never did get that Q1 connection total in a PR. With the stock getting absolutely destroyed, you'd figure they would have released that if it was good.
Also, regarding the prev discussion on valuation, I don't think it was just the 10K assets/Qtr that was driving the C$6/sh valuation it was also the projected C$25M/yr in Proj serv rev, which seems to have vanished.
Shares STILL for sale under $1. It's unbelievable. Whoever is dumping still isn't done.
Daily RSI(14) = 14.84
This. Is. Ugly.
It can turn in a hurry. We saw that happen with TSLA a couple years ago, albeit on a different scale. They were burning through tons of cash and the stock was tanking in 2019 as capital raises were becoming more expensive. Then they hit a couple milestones and the stock turned and voila ... 25-bagger. Granted, a very different situation, but a good example of how quickly things can change when you're in a valuation death spiral.
If they could ever get this stock moving higher they have almost C$50M in outstanding warrants, so there's your funding. Wishful thinking, I know.
2.6M C$5.4
3.2M C$4.75
6.9M C$2.8
It's strange that they need to open a $5M line of credit with all that "pull-forward" rev they are bringing in ea qtr LOL. Out of all the BS they've thrown at us over the past year, I'd have to rank that "pull-forward" scheme they sold to us during the Q3 call #2 on the Greatest Hits (behind the $70-72M 2020 rev guidance of course).
https://investor.mcloudcorp.com/press-releases/press-releases-details/2021/mCloud-Signs-Commitment-Letter-for-5-Million-Operating-Line-from-ATB-Financial/default.aspx
No, I'm not in it. Don't know anything about the co,, other than RCA is involved. The chart does look kind of interesting though.
Prime, you'll have to forgive me, mCloud losses have made me a bit cranky of late :)
In regard to DRIO, the stock may have gotten crushed, but its been on quite a run since last March (up almost 400%). So bring some of that momo our way Mr.Andrews.
Not sure what you are referring to with "board person comment". I think that may have come from someone else.
It's a fair point that the US and Canadian deals may be completely different. In the video, O'neill does seem to be talking about just the US portion when talking "pay for performance" so it's possible the trial is a subscription model in Canada and a pay for performance model in the US, which would explain the apparent contradiction. Might be an interesting way for them to assess both possibilities going forward to see which works best.
Some really good information in there. Thanks.
It definitely helps explain things, but this all seems to contradict what O'neill said in the video where they attempted to explain this program. He said "... they only pay us when we deliver energy savings for the customer." That implies that the utility company is actually paying mCloud based on actual realized energy savings. That's very different from the info provided in those links which seems to indicate that the customers are signing up for a subscription service directly with mCloud and get paid an incentive from the utility co. to do so. It's also unclear how a 36-mo subscription fits into a 1-yr trial pd. And according to the BC Hydro link, the deadline for signing up for the trial has already passed (April 30th), so it sure doesn't seem like this will be very impactful to their growth in asset connections this year. Also, no indication about who is footing the bill for the installations. Doesn't seem like a good deal for mCloud if they are covering the installation costs and then only getting a 1-yr trial sub instead of 3 years.
I tried looking at the websites for some of the large utility co's in Cali, but couldn't find any programs involving mCloud. However, it does seem that at least some of these utility co's have the capability to implement Automated Demand Response systems directly with customers without a 3rd party. I guess mCloud will try to differentiate itself with the IAQ, remote access and monitoring capabilities.
If I'm being honest, nothing I read made me very optimistic about this program. Who knows, maybe for the first time as an investor with mCloud something will actually exceed my expectations rather than Qtr after Qtr of false promises and major disappointment.
I also find it funny that there appears to be direct competition for subscription services in this space when I've heard McMeekin say in presentations that their biggest competition is "doing nothing". LOL.
There's always the possibility that this is forced selling because someone took a hit elsewhere. Who knows, but it got ugly in that last half hour of trading on Friday for sure. Sure did not look like someone concerned about price.
Did you have any thoughts on the partnership recently announced with the utility companies? I've watched that video several times and I still can't figure out who pays mCloud in this "pay for performance" deal. I like the idea of leveraging the resources and reach of these utilities, but I thought they did a really poor job selling this plan to investors. I honestly can't tell if this is a game-changing opportunity for them or just more fluff. I mean, if these utilities are actually incentivized to push mCloud's tech out to their customers because of govt regs, mandates etc, than this could be huge esp if they are subsidizing the cost to customers.
One additional comment re your post ...
If the recent selling pressure is the result of a few million RSU's hitting the market from prev acquisitions as you suggest, then isn't that even more concerning given that we'd be talking about shareholders who are insiders?
Good post. I hope you stick around and continue to contribute.
I agree with much of what you wrote. A few comments ...
1.) "...cash burn was set up on assumptions pre-pandemic."
This was the only real exception I took with your post. Mgmt deceived us regarding their cash burn long after the pandemic was a known risk IMO. We were directly told as recently as Dec that the converts + "pull-forward" revs would be "more than sufficient" only to learn 4 mos later that all that money was already gone. And don't even get me started on the "pull-forward" rev spiel they laid on us during the Q3 call. Also, the infamous 5/26/20 rev guidance of $70-72M for 2020 was also given DURING the pandemic. 4 mos later they had $17M on the books. Shameful.
2.) "The bottleneck hasn't been lack of demand, it's been logistics for implementing during Covid."
What concerns me is that the "bottleneck" hasn't really changed. It's been presented as a "line of sight" to 70K assets for about a year now. Shouldn't the asset count backlog be growing while they are still restricted logistically if the demand is there? Similar to your comment on how the 5-yr target should now be a 4-yr (or less).
3.) "New assets are being brought in at around $140-150/asset. You can do the math on the marginal recurring rev vs new assets"
I think this is probably the most encouraging stat that I've been tracking and IMO probably the most underappreciated. I've calculated the last 3 Q's to be $66, $103 and $170 (using a weighted avg for marginal assets of .67x prev Qtr and .33x Current Qtr). With the overall avg MRR/asset still down around $32, this avg will continue to ramp higher and boost that "over-time" rev at a higher rate than the actual connected asset growth rate. I was concerned that perhaps the Q4 licensing revs had artificially boosted that $170 number in Q4, but according to IR that rev is now being recognized evenly throughout the year due to an acctg change beginning in 2020. Definitely a stat to keep a close eye on.
4.) Regarding the recent selling, where are you getting the 4M share count from? Is that the number of restricted shares that recently matured?
Come on now.
This company has enough problems without a half-ass attempt to try to connect Andrews to the malfeasance at Interoil. As far as I can tell, Andrews isn't even mentioned in any of those links and didn't even begin working at Interoil until 4 years after Casserta had left the company. You've created the impression that Andrews was implicated in that mess and at least one person on the board has already bought it.
383K shares traded in the last hour of trading on the TSXV.
Was that the final dump? Please?
Prime, this was McMeekin's response during the Q3 CC, when asked about the non-recurring charges ...
"Yeah. So there’s explicitly about $2.5 million in Q3 was tied to kanepi and two financings. Right?
And then all of the work around that. So there was a little trickle over into Q4 from kanepi because it
didn’t close precisely on September 30th, if you recall. And so we have lawyers in Australia and so on, and
that was a total pain dealing with the regulators down there. So there should be some residual in Q4 but
nothing like you saw in Q3. And in Q2, you had other big deals. Right?"
Is there something else going on here?
I realize that we just got diluted again, but the selloff has gone beyond just adjusting to the pre-offering market cap. The dilution was about 21% factoring only the outstanding shares and excluding the warrants (33.2 to 40.1). The stock closed at C$2.39 on the day the offering was announced (4/8). The stock is currently at C$1.25, so down about 48%.
Yes, tech stocks have been getting whacked across the board of late, but that's been driven by a rotation out of sky high multiple stocks into value. If mCloud can hit about 85K assets by year-end, I think the "over-time" run rate could top $40M, which would mean mCloud would be currently trading at about 1.25x the recurring rev run-rate at the end of this year. How's that for value?
But you can't deny the relentless selling pressure on this stock. Somebody is dumping. But why now when the the Covid restrictions are finally lifting and mCloud should be able to begin ramping up their asset connections to full capacity? Why now when they claim to be finally on the verge of generating positive cash flow? Does somebody know something? Could this be a single large shareholder throwing in the towel as a final vote of "no-confidence" to the Mgmt team after the recent financing? Is Prime perhaps right that the institutions who bought the recent offering are already dumping?
I'm starting to feel like I'm the idiot in the room and the last one holding the bag. I'm also worried about the Q1 results. Why haven't they released the Asset connection numbers yet for Q1? Why was Russ so wishy-washy when the analyst asked him if Q1 revs would top Q4 revs during the last CC? Why are they holding the CC during morning market hours rather than after the close?
We've been told multiple times by the co. that $14.5M in rev will be generated at 70k assets, which would be hit by mid-year. Based on your projections, I see that you don't believe it either.
Also, regarding their cash. They started the year with 1.1M and raised $4.23M with the converts and $14.49M with the secondary in 2021. They reported $14.365M cash on the 4/23 pro-forma. So, unless I'm missing something, they burned thru another $5.45M in the 1st Qtr + 3 weeks. I need to see the cash flow improvement before I'll believe it,
Confirmed 5/26
https://investor.mcloudcorp.com/press-releases/press-releases-details/2021/mCloud-to-Host-First-Quarter-2021-Financial-Results-Conference-Call-on-May-26-2021/default.aspx
Holding the CC during market hours is new. Usually after the bell.
The Q1 CC was on 5/26 last year. It was combined with the Q4 2020 results. I'd be careful with the "plenty of cash" assumption, until they prove they can stop burning thru cash at $4-$5M a Qtr.
The stock is getting demolished and the best news they have to offer us is their 2020 ESG report? Are you kidding me? How about a Q1 asset connection number showing us they're on schedule to hit 70k assets by "mid-year".
btw, the ESG report includes this doozy ...
""Holding everything together at mCloud is our strong commitment to accountability and transparency. The shareholders, employees, customers and suppliers need to know that they can trust mCloud, and that trust is earned on a daily basis through a rock-solid ethical framework."
The stock would need to go up > 30% to even put those recent secondary shares in the money.
What new stock are you referring to that will hit the market over the next few months? The warrants out there are all at higher prices: C$2.80, C$4.75, C$5.40
Update on Short Volume.
I wanted to update my previous post from yesterday regarding the daily short volume in MCLDF and how it may be a sign the stock is being manipulated. Something seemed fishy when I checked the open short interest as of the last update (end of April) and it was only 11,600 sh despite the the big daily short vol. After some additional research, I learned that the daily short vol numbers can reflect regular transactions where the broker is executing the sale on behalf of the shareholder by first shorting into the market and then covering by buying from the shareholder. I'm not sure if that's a more common practice with OTC stocks or not, but given the minimal open short interest in MCLDF, it appears that is what is going on.
If the convert buyers are suppressing the stock price, it does not appear to be via short-selling. Just wanted to clear that up as I definitely don't want to mislead anyone.