I reckon the number $13.3 million for gross cash operating expenses in the 2018 September quarter is super-bullish. My logic is:
Full year 2019 gross cash operating expenses will be approximately $53.2 million (September quarter x 4).
Annual recurring revenue (ARR) is likely to be very close to, but perhaps just shy of costs - this is my key assumption, but I believe management has already put in place the strategies to achieve this.
So, let's say ARR in 12 months time is $50 million.
Put that on a multiple of 15x (which is what LiveTiles has traded on historically) gives a valuation of $750 million.
The current market capitalisation is $333 million.
Presto!
Management is both competent and aggressive. If they can achieve ARR greater than costs over the full year, say $55-60 million, the multiple should be significantly higher, because it would demonstrate accelerating growth, the promise of scaleability (transitioning to being cash positive) and validation of strategy. This could justify a multiple of 20x. I am sure management know this and will be trying to achieve it.
Management - and shareholders - have everything to play for.
