I went over their 10-K and some of the 424B5 forms (supplemental prospectus where they gave figures), and they gave specific numbers such as 6.1% and 6% for the buying power of MoviePass subs vs total ticket sales. This was for the April, 2018 time frame. However, they did not detail how exactly they calculated this number for box office %. Also, I use the-numbers.com, and I think they use some variation of some number from the Motion Picture Association of America (mpaa). So I don't expect this to match. Plus, I somehow don't trust their number. This is the only figure that doesn't really match up with the other numbers like when I change the MP moviegoers ratio to 1.7 ratio and so on.
As for the 60% reduction, where it gets applied to makes a WORLD of difference. Let's take their Financial Statement for example (the Subscription and Marketing and Promotional Services section, on page 29 of their most recent 10-Q for Q1):
All numbers in millions...
Subscription: $48.6
Cost of revenue: $135.3
============================
Gross Loss: ($86.7)
Total Operating Expenses: $11.7
============================
Loss from Operations: ($93.3)
Subscription: $48.6
Cost of revenue: $54.1 (we apply -60%)
============================
Gross Loss: ($5.5)
Total Operating Expenses: $11.7
============================
Loss from Operations: ($17.2)
Subscription: $48.6
Cost of revenue: $135.3
============================
Gross Loss: ($34.7) (we apply -60%)
Total Operating Expenses: $11.7
============================
Loss from Operations: ($46.4)
So, even though Mitch Lowe said said the 60% reduction is the "Cost of Goods" while the SEC filings say it's the "monthly deficit" (which if you look up online, there's no real financial standard definition for this word. In other words, they made up these words and as such), we still have no freaking clue what they really mean, or what kind of creative Enron-style accounting they're using.
Technically the "Cost of Goods Sold" is part of the "Cost of Revenue", so if we literally take that into consideration, from a standard financial perspective, reducing "Cost of Goods Sold" by 60% will only reduce "Cost of Revenue" by a fraction of that, such as 35% because Cost of Revenue also includes other things NOT part of "Cost of Goods Sold" that would therefore NOT be reduced.
I know from reading the 8-K dated July 31, 2018, they made changes to prevent people from seeing movies, which reduces ticket costs, which in return reduces "Cost of Goods Sold". But that means the ratio that Mitch quote of 1.7 would NO LONGER apply. In fact, Mitch quoted the 1.7 and mentioned it was in the month of "May" so I strongly believe that ratio is no longer relevant starting in August because of the changes they did recently to prevent people from seeing movies. That 1.7 is only useful for calculating Q1 and the 2017 FY numbers.
But.. once the Q2 numbers come out, we'll get a clearer picture of the "monthly deficit" or "cost of goods" as Mitch put it. I can then go back and redo my calculations based on what matches and deduce in deed if "Cost of Goods" is really the "Gross Loss" or the "Cost of Revenue" or just a part of the "Cost of Revenue". That's why I can't wait to see what kind of mess it will be LOL
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