Pinnacle Activity Ticker
Virtutone (VFX.v) : 17.7 millions minutes in 1st month of agreement with large Telco
Significant progress with material impact announcement made yesterday. Virtutone(VFX.x), only one month after signing a Wholesale agreement with a Large Telco, unveils traffic of 17.7 million minutes per month. As indicated by the company, there is a line-up of customers waiting for subscription (see page 9 of http://www.smallcapconference.ca/images/Virtutone-Networks-May12.pdf ) , and this traffic was simply the result of a test phase for contract signature. Remember Virtutone has been profitable in the past 5 quarters, has no debt and generates cash.
As indicated in the IR presentation given on May 10th 2012 page 11, the average price per minute is .004$, which provides the following calculation
17.7 M minutes/month x 12 months x .004$/minute = 849 600$/year
Gross margin for Virtutone is roughly 50% on average, but applying a safety factor of 2 for investors calculations shows net profits to exceed 200 000$/year, or more than .01$/share of earnings.
On April 25th, a press release was issue stating that Virtutone was ranked #1 growth company of the year by Branham300, which indicates that a reasonable price/earning ratio will far exceed 10, thus giving investors a taste of the impact of the press release. More customer announcements are expected in the short term, along with Q4 results prior to month end, and Q1 in June 2012.
And investors ought to remember about the following growth initiatives underway, as explained in previous MD&As and press releases:
• the company is trying to expand its reach in US energy where it already has a foothold
• the company is trying to replicate contracts similar to the CASH STORE, where a large number of offices/branches would be involved; Cash Store contract is already bringing in 1.5M$ of recurring revs per year
• the company is expanding the CASH STORE contract as new offices are opening and being integrated in the Virtutone network
• Virtutone is trying to capitalize on its acquisition of Transcendent Global, with complementary sales and contracts spearheaded by Greg Berlocher
• Yesterday announcement of 17.7M minutes is just the start for the wholesale agreement, and these are not the largest foreseeable customers under the agreement with the large Telco
Yesterday’s press release is below:
Virtutone wins contracts for 17.7 million minutes/month
2012-05-24 13:54 ET - News Release
Mr. Jason Allen reports
VIRTUTONE ANNOUNCES UPDATE ON WHOLESALE OPERATIONS
Virtutone Networks Inc. has secured contracts for an estimated 17.7 million minutes per month of wholesale long distance from customers in its first month of wholesale operations.
"We have surpassed our initial targets for Virtutone's launch into the wholesale market. With the quality and price we are offering, we are getting an overwhelmingly positive response from Canadian, U.S. and international customers," said Jason Allen, Virtutone's president and chief executive officer. "In addition, our sales team is engaged in numerous negotiations which we are confident will result in new customer wins. We look forward to providing continued successful updates as these deals come in."
We seek Safe Harbor.
The above is simply my personal understanding and not to be construed as investment advice. I’m not a broker, director, manager or employee of the aforementioned company, just a shareholder. Some typos could have occurred, do your own due diligence.