|
Column 1 |
Column 2 |
Column 3 |
Column 4 |
Column 5 |
Column 6 |
Column 7 |
Column 8 |
| 1 |
Stock |
Annualised Revenue(m) |
Shares(m) |
Half Yearly Profit/(Loss) (mil) |
Share Based Payments Expense (mil) |
Share Based Payments as % of Profit/(Loss) |
Performance Shares/Option Conversions/Discounted shrs issued (m) |
Performance Shares issued (m) as % of Issued Shrs |
| 2 |
Appen (APX)[/B] |
$ 166.60 |
105.81 |
$ 14.29 |
-$ 0.41 |
3% |
1.56 |
1.5% |
| 3 |
|
|
|
|
|
|
|
|
| 4 |
Get Swift (GSW) |
$ 0.66 |
188.52 |
-$ 5.50 |
-$ 3.36 |
61% |
11.98 |
6.4% |
| 5 |
Yojee (YOJ)[/B] |
$ 0.45 |
767.44 |
-$ 3.51 |
-$ 1.74 |
49% |
283.00 |
36.9% |
| 6 |
Buddy Platform (BUD)[/B] |
$ 1.67 |
1,072.07 |
-$ 7.05 |
-$ 2.79 |
40% |
152.54 |
14.2% |
One thing that concerns me about holding small cap tech stocks is the degree of dilution created by companies dishing out unreasonably large quantities of performance shares/rights/options to their management.
I have a little table above comparing some of these tech stocks. GSW/YOJ/BUD share one thing in common- their share based payments to management are incredibly high and bear no correlation to their financial performance. None of these tech stocks made even $1m revenue in their latest half year results and all registered fairly large half yearly losses. But their share based payment expenses were between 40-60% of total operating losses - does this stack up? In contrast, if you compare against a well run APX that delivered the goods, share based payment expenses were a mere $410k or 3% of total annual profits ($14.3m profit was annual not half yearly).
Even more ridiculous is that the total shares issued in respect of performance shares/options were as high as 37% of total shares issued in the case of YOJ and 14% in the case of BUD. And these performance shares/options were issued at nil consideration or at a tiny fraction of their trading price at the time. How does this impact shareholders? Well, you have to ask if the magnitude of the performance share issue were warranted for the delivery of financial performance. Never mind if they were for other metrics achieved because those metrics don't mean anything if they don't show up in revenues and profits. Such unreasonable issuance also meant that for a given market cap valuation, had the issuance not been made, a YOJ shareholders could potentially have the 37% reflected in a potentially 37% higher share price. And to top it off, sooner or later another round of CR will be made to further increase the already bloated share base.
You have to ask yourself if management of these companies are actually working for you or is it the other way around?
*Table compilation from recent half yearly reports and may be subject to inaccuracies.
, tech smallcaps are seemingly heading for more pain ahead as we are way past the days of exuberance as you mentioned.
