Is Verizon Tecnotree’s Tier 1 customer?
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Amazing Tecnotree! These are coming thick and fast, and we’re starting to review the guidance to see if we need to react to it soon!
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Indeed! Competitor Cerillion is strong especially in Great Britain, and Tecnotree hasn’t had customers there before.
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Great to see an activist investor on the Helsinki Stock Exchange!
Recently, they have been in contact with the company’s management regarding the factors behind the prolonged share price decline.
“We have been in contact with the board and [Chairman of the Board] Neil Macleod. The themes discussed included communication, excessive compensations, and governance and cash flow problems. We have actively promoted the interests of minority shareholders,” Pauli Haarala, Nieminen’s portfolio manager, states to Arvopaperi.
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According to Haarala, the convertible bond arrangement was not handled correctly, but this has served as a learning experience for the company.
“The communication regarding the arrangement was not handled correctly, but the company has learned from it,” Haarala states.
In Haarala’s opinion, Tecnotree has taken the feedback seriously. For example, in the company’s published materials, such as the annual report, deficiencies in communication have been acknowledged.
“I give the company credit for this,” Haarala states.
Remunerations have also come down. At the last general meeting, it was decided that the remunerations for the board and management would be cut by 63 percent from the previous year to 215,000 euros. This is a significant sum for a company that has faced challenges in keeping its free cash flow positive.
“It is a concrete demonstration that owners are being listened to.”
Haarala, however, admits that CEO Padma Ravichander’s remunerations are still too high compared to relevant benchmarks, but here too, the direction is correct.
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Here’s a fresh company report from Roni. 
Tecnotree announced on Monday that it had signed an agreement with a global virtual mobile network operator to deliver its BSS platform to the UK and other European markets. The five-year agreement is valued at approximately 19.6 million dollars, which is a significant contract for Tecnotree. We made clear upward revisions to our forecasts and also consider an increase in guidance possible this year. The company is currently in strong sales momentum, but in our opinion, improving cash flow has already been priced into the stock due to the share price increase. We raise our target price to 4.3 euros (previously 3.8 EUR) and reiterate our reduce recommendation.
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If I now gather a brief summary of the contracts received this year, I got the following list (hopefully everything is accounted for):
-USA, Tier 1 customer (value less than 10% of last year’s revenue)
-Netherlands, multi-year contract (value less than 10% of last year’s revenue)
-South Africa, 39.6 million euros over 7 years, revenue recognition starts now at the end of the year
-Tata Communications (value less than 10% of last year’s revenue)
-Great Britain and Europe, 19.6 million euros over 5 years
In my opinion, each of these contracts can be categorized as a reliable payer, and the strategy of expanding into the USA and Europe is progressing nicely. Some of these contracts will already be recognized as revenue partly this year, which means several million euros. Last year’s revenue was 71.6 million euros, and for example, Q4 was 17.6 million euros. Surely one can conclude from this that revenue at the end of the year must grow significantly? Let’s see what they get out of the guidance update once they finalize their plans.
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And we could compare Finnish listed IT companies, what others’ order books and growth prospects are like.
This company’s recommendation is to reduce.
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The interest rate on the CBL is 0.01%, which is negligible. Mainly, it will be interesting to see if Fitzroy can raise the missing 20 million by the end of the year, and if it’s even in the interest of small investors if they do? The cash reserves can sustain the current moderate growth, and on the other hand, 20M is quite a small sum for larger acquisitions, and using own shares for acquisitions at this valuation is probably not appealing. Of course, if growth is strong, cash will probably be needed, because growth inevitably consumes cash (at least 96% of businesses).
I would be interested to know what Tecnotree’s so-called maximum volume is with these resources, measured in revenue. In the Q4 earnings report, there was the following:
The latest deal was described as follows:
If that 20M deal (5 years) represents an average, could Tecnotree have the resources to grow revenue by approximately 20-28 million per year? If so, then production has been refined and scales strongly.
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The Netherlands deal is that of Tata Communications. The statement also clarified that The Netherlands = The Netherlands, APAC, and India.
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Apparently, things are working and the product is in good shape when contracts are renewed!
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But will the money ever be received? That’s probably been the big problem here, unfortunately?
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This billing is in US dollars. There are unlikely to be any payment problems when billed in dollars or euros.
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If it’s an annually renewable contract, it surely means they’ve been paid before and are renewed again accordingly.
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If I were in charge, I would hardly extend the contract very easily if the money hadn’t come. In addition, payments are made in dollars.
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Could someone advise me? Which Middle Eastern operator has a lot of receivables? In my understanding, slow receivables are more related to the African continent.
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Perhaps I dare to share a technical perspective here, based on a couple of decades of experience. It seems that the worst selling pressure has been overcome.
Edit: For those less familiar with TA, just a tip: here you see a classic case where a company’s business performance slowly restores investor confidence.
There are still good reasons why the improvement in the company’s cash flow cannot be trusted, and on the other hand, there are good reasons why the cash flow should improve strongly.
Only time will tell what happens. But right now, TA indicates that a larger proportion of investors believe in the improvement of cash flow than sellers believe in a decline. Less than a year ago, it was different. This number of buyers and sellers (of shares) is ultimately the determining factor for the price direction.
https://keskustelut.inderes.fi/t/tekninen-analyysi-ei-kyselyita/654/7183?u=moneywalker
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Holiday substitute analyst @Joni_Gronqvist has written comments on Tecnotree’s recent extension agreement.
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Let’s dig into some old details with a few new ones. Everyone probably remembers how the name of the Dubai company and the mention of Dubai disappeared from Pericius’s website last summer after Inderes raised the first questions about that 2 million euro advance payment.
Naturally, no company ownership information or financial statements can be obtained from Dubai, but at least a few names can be found in local registers. The first one to appear in Dubai (Pericius Technologies DMCC, 2/2020) was thus registered by Padma’s son, Kartik.
The second one registered (11/2021), and the company that appeared on Pericius’s website until Inderes’s contact, was Pericius Technologies Computer Systems Software Design. For that company, two different names appeared in the registers: Ashray Vishnu and Unnati Bhat(t).
The first mentioned is a young Indian lawyer based in Dubai, who previously worked under Kartik. Based on social media, one could even elevate the man to a family acquaintance of the Ravichanders.
The other name found in the registers, Unnati Bhat(t) (understandably, she spells her surname with two T’s herself), is or was Padma’s personal assistant. A somewhat unusual name to end up in Pericius’s details in the Dubai company register. However, something even more peculiar is found when looking at which services that email address has been used for, and by whom.
The email address unnati.bhat@pericius.com has been used to register for the Nike app… under the name Kartik Krishna Ravichander.
Convertible Bond Payments, Dubai Real Estate Deals, and Pericius’s Advance Payment
The 2 million euro advance payment made to Pericius thus came to light in spring 2024. The payment was made during Q4/2023. Around the same time, Tecnotree collected convertible bond subscription payments in several installments, including from Padma.
The real estate transaction data that has spread from Dubai in recent years is interesting in many respects. When these three matters mentioned in the subheading are placed on a timeline from August to December 2023, it looks like this:
7-9/2023: Padma pays subscriptions totaling 5,800,000 euros
3.8.2023: sale of one luxury apartment in Dubai for millions
20.11.2023: second mortgage on a massive luxury apartment in Dubai
10-12/2023: 2 million euro advance payment from Tecnotree to Pericius
10-12/2023: Padma pays subscriptions totaling 7,200,000 euros
PS. The addressless Clarus Softwares, which rose from the ashes of Pericius in Dubai this spring, is now also phoneless. But surely this company also bills others besides Tecnotree. Absolutely sure.
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Someone might know more about this or be interested in digging deeper (I’m a novice myself). However, as I understand it, India has laws that restrict company operations based on the number of employees, meaning if a company has X employees, but if there are more employees, separate permits and who knows what else would be required. Because of this, it is not, as I understand it, entirely uncommon for a company to establish another company that hires employees who, in reality, work for the main company under a consulting agreement. This understanding is based on the fact that I once came across an article somewhere that explained such a pattern, and I asked an AI about it, which stated that such legislation exists in India, making this kind of procedure not entirely exceptional. Note: treat this information with caution.
I don’t know if Tecnotree does this, and if they do, whether these messes dug up by WhoopWhoop are part of such a tangle. Nor do I know how one should react to it IF these are, in practice, circumvention of local labor laws.
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In Nordnet, the number of owners has continued its decline as the price has risen. Last week, there was a small increase in the number of owners. This potential change in direction would be in line with the fact that the price has broken through the volume profile peak price of 3.50. I wrote about this in the TA thread.
This is, of course, just a small psychological signal.
The company’s fundamentals (free cash flow) have already turned positive. It will be interesting to follow the development of the number of owners in Nordnet.
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