AI
Friday, November 13, 2020 5:36:48 PM
I didn’t expect to see profits, they aren’t quite up to B/E yet, but on an annualized basis I think they are getting very close. Actually, this quarter would have been profitable if the gross margin had improved about 2 points above last quarter. Instead the gross margin dropped. An explanation would have been great but note this:
This lower gross margin is due to the inclusion of new destinations in our portfolio. To develop a new market and to be able to obtain from it the expected margins, it is necessary to advance along several stages. First, it is important to add some routes to the portfolio and capture a significant volume of traffic from the customers to those routes. Once a critical mass of traffic has been reached, the company is in a better position to negotiate with vendors the price conditions and payment terms. These are the two aspects that mainly determine the gross margins.
That was from the last 10-K, and as they were growing then and adding new destinations, so were they adding destinations again in Q3, namely China Mobil and Telefonica. I don’t know if that explains the drop, only they could answer, but if this is a good guess then the margin drop should be temporary and we should see improvements in the next quarters. In fact, they already told us in a recent PR that margins have improved significantly from the last month of Q3 along with another big increase to the monthly revenue base.
Is the company improving? Q2 included an extra-ordinary gain, but this gives a picture of the current trend.
A profitable Q3 would have looked like this, you just have to assume that the gross margins are possible. We know Etelix has reached this level and better, and the Goldman report believes they can do 11.1%, in 2021 then 18% in 2022. So the question then is the near constant growth masking the true potential? Obviously it will take another quarter or more before it becomes clearer, and they may continue to grow, but with enough revenue the more fixed costs become less and less a factor and thus the potential for profit may become greater, or simply put, passing the breakeven point.
$13,291,698 Q3 Revenue
$1,196,252 Gross profit if margin had been 9%
$1,196,252 – $958,787 operating expenses – $144,451 other expenses = $93,014
Q4 revenue looks on track to surpass $15,000,000. Guidance is that gross margins have improved and also we have no reason to assume that operating expenses will increase, and in fact this time they are roughly equivalent with the last quarter.
Also, it will be interesting to see what the Goldman report will include this time. They say he plans to talk about the EV deal, maybe there is something positive in that, but I have come to look at it maybe it’s mostly just a service type arrangement for iQSTEL. iQSTEL provides the service, and hopefully ALYI compensates. Like perhaps Cynopia did a service for iQSTEL recently. Don’t know if that’s right, but iOT can touch so many things, any little revenue stream added here or there sounds like could be a good thing. Maybe there will be hundreds of these, and if so, hopefully all good for iQSTEL. And maybe if they can get a good foothold in iOT, and their knowledge and experience grows, it will begin to attract some more established companies to partner with as well.
This lower gross margin is due to the inclusion of new destinations in our portfolio. To develop a new market and to be able to obtain from it the expected margins, it is necessary to advance along several stages. First, it is important to add some routes to the portfolio and capture a significant volume of traffic from the customers to those routes. Once a critical mass of traffic has been reached, the company is in a better position to negotiate with vendors the price conditions and payment terms. These are the two aspects that mainly determine the gross margins.
That was from the last 10-K, and as they were growing then and adding new destinations, so were they adding destinations again in Q3, namely China Mobil and Telefonica. I don’t know if that explains the drop, only they could answer, but if this is a good guess then the margin drop should be temporary and we should see improvements in the next quarters. In fact, they already told us in a recent PR that margins have improved significantly from the last month of Q3 along with another big increase to the monthly revenue base.
Is the company improving? Q2 included an extra-ordinary gain, but this gives a picture of the current trend.
A profitable Q3 would have looked like this, you just have to assume that the gross margins are possible. We know Etelix has reached this level and better, and the Goldman report believes they can do 11.1%, in 2021 then 18% in 2022. So the question then is the near constant growth masking the true potential? Obviously it will take another quarter or more before it becomes clearer, and they may continue to grow, but with enough revenue the more fixed costs become less and less a factor and thus the potential for profit may become greater, or simply put, passing the breakeven point.
$13,291,698 Q3 Revenue
$1,196,252 Gross profit if margin had been 9%
$1,196,252 – $958,787 operating expenses – $144,451 other expenses = $93,014
Q4 revenue looks on track to surpass $15,000,000. Guidance is that gross margins have improved and also we have no reason to assume that operating expenses will increase, and in fact this time they are roughly equivalent with the last quarter.
Also, it will be interesting to see what the Goldman report will include this time. They say he plans to talk about the EV deal, maybe there is something positive in that, but I have come to look at it maybe it’s mostly just a service type arrangement for iQSTEL. iQSTEL provides the service, and hopefully ALYI compensates. Like perhaps Cynopia did a service for iQSTEL recently. Don’t know if that’s right, but iOT can touch so many things, any little revenue stream added here or there sounds like could be a good thing. Maybe there will be hundreds of these, and if so, hopefully all good for iQSTEL. And maybe if they can get a good foothold in iOT, and their knowledge and experience grows, it will begin to attract some more established companies to partner with as well.
