mCloud Technologies Corp (MCLD)

[DVP25]

Their operating loss in Q2 was just under $7.6M.

If we take an optimistic view and reduce their "prof and consulting fees" by a full $2M, then they have about a deficit of $5.5M to make up to break even.

Let's take your $8M "over-time" estimate on 70K assets, which I think is fairly reasonable. That would be an increase of approx 4.4M over the Q3 number. Apply a 65% margin and you get $2.86M in additional gross profit (only about half the qtrly deficit).

How much Project revenue would need to be generated to make that up. At a 40% margin, you'd need about $6.5M in Qtrly Proj Rev to make up the diff.

And of course, this crude analysis assumes no increases to any indirect expenses not included in the cost of sales. You can see why I'm skeptical that 70K assets is the magic number to profitability.

There are, of course, other variables to consider like potential rev from the Connected Worker segment and 3D digital twins that could help make up the difference. In addition, increasing the % of industrial assets will boost the avg rev per connected asset. Also, as you mentioned, Initialization Rev has to be taken into account when projecting profitability.

So, it's certainly possible they could be profitable at 70K assets, but it appears to me to depend on a host of other factors.