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Nete Q4…..Suddenly became Much bigger

05 Apr

Did you ever do something in your life that you were SO Sure of, only to have it thrown back in your face that it was SO wrong, only to find out……you were right all along?

Well, for the most part anyway. Except for the part i missed that impacted it. In a big way.

Welcome to Nete’s Q4.

Leading up to Nete’s Q4, i wrote a few blog posts here analyzing transaction dollars quarter to quarter and how they suggested that we were in for a BIG Q4 number. My work suggested the number would be 19M, 20M…maybe even 21M.  I set my expectation lower than that, at 17M because it was a number i could be very happy with anyway but as i expressed on several occassions, I REALLY thought it was going to be 19-20M.

Imagine then…my horror….my outright shame even….when the number came in at 15.3M.  versus 15.1M in Q4 2015.  A whole year….all the hype surrounding how great growth was …and it was reduced to that. I and others scrambled to find the reason. Frankly, i couldnt believe it. Where did 1.1 Billion in transaction dollars go? Because that is the amount that was suggested that Q4 came in at when the final tally came out at 2.45B. But revenues were….15.3M ? We found, a solution. It was in the promos we thought. The way the company was promoting a 30-90 day trial for new customers to test drive the services. Surely, that was it ….right?  Wrong.  Or, maybe it still is some positive impact yet to come. But that is not what caused the distortion in what we were seeing.

It was due instead to the mobile solutions segment. When you factor in THAT issue….an apples to apples comparison would be Q4….2016…..came in at 20M revenues vs 15.1M in 2015.  Right on target. While revenues really were 15.3M….if we’re going to look at a year over year comparison we really need to add back in an adjustment for this issue of 4.7M. It’s really most important to do that because it REALLY shows how much this companies business is growing in the businesses they’re in now. ALSO..if you adjust for it, it would be as if the entire year didn’t grow at 35%…..it was more like 45% instead.

I’m not going to again break out all the transaction #’s and whatnot, but i will just refer you to the conference call and particularly the segment where Lisa From Zacks had the discussion with the company about this. you can see in that discussion how much this mobile segments issue impacted the quarter versus quarter year over year results.

It was enormous. And again..while the actual number WAS 15.3M….and i dont want to try to distort that fact….the IMPACT of this in how we should view their business was more like it was 20M instead. Versus 15.1M last yr.

Huge?

I think so.

 

~Congo

jmho

Do your DD.

I’m currently long Nete Stock

Link to conf. call transcript…thank you to Lisa From Zacks for really pursuing this questioning with the company. 🙂

https://finance.yahoo.com/news/edited-transcript-nete-earnings-conference-233118552.html

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Posted by on April 5, 2017 in Uncategorized

 

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