Earnings Update: LUNA and BFDI

Good morning everyone! A few updates to report:

LUNA reported earnings yesterday after the close. In a nutshell, the company is now EBITDA positive and the net loss of $2.2 million is chocked full of one-time charges; actual net loss was in the $400k range. This was a very important earnings report as it was the first one with the combined numbers of API and LUNA since the merger. During the conference call the question was asked if API's business was stabilizing if looking at it independent of LUNA, and the numbers proved that it is. This should ease some of the selling pressure the stock has seen since the merger was announced. 

While the LUNA report was a very solid report, I do not think it will have a major impact on the stock initially, but we should start to see a steady climb in the share price. 

I was able to follow up with BFDI management and have the following specific questions answered. My article hit on these points, but here are the specifics directly from the company. 

  • Recurring vs. Non-Recurring Rev Mix
    • Vehicle services represent over 80% of revenue as of Q1 with the remainder of sales derived from traffic safety division. The traffic safety revenue is recurring revenue from the collections on each camera that is ongoing. This revenue is currently around 18% of total revenues, but it is expected to grow significantly with gross margins north of 60%. 
      • Note (very important and key!): the company expects recurring revs to grow at a fast pace, and these revs have 60% gross margins. Currently, 80% of the company's revs have gross margins of around 18% (vehicle uplifting services). Gross margins will continue to increase as the company's traffic safety and red light enforcement division grows, which is growing quickly, including internationally. This is fantastic news as it relates to the path toward profitability. 
  • According to a report by Tactic, the wearable camera market will increase from 5.6 million shipments in 2014 to 30.6 million units annually by 2020. Huge growth opportunity.