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WEYL: Q1 Results Lets Weyland Hit Uplisting Requirements

05/25/2017
By Lisa Thompson

OTC:WEYL

Weyland (OTC:WEYL) reported Q1 2017 revenues of $2.8 million versus $2.3 million, up 25% from Q1 2016. We had been expecting revenues of $4 million; Weyland’s core subscription business performed as expected, while planned new business project ramps were delayed as go-to-market plans and additional cross-marketing service offerings are being developed. While the delays are disappointing, we view getting marketing plans right and accelerating complementary service opportunities as the right trade-off to make. 

Gross margins declined from 72% to 63%, with gross margin dollars rising 11%. Operating expenses were $339,000 versus $257,000 as the company added staff. Operating income (also net income) was $1.5 million versus $1.4 million, up 6.4% and the company was untaxed. We had expected the company would recognize R&D expense in the quarter as it did in Q4 2016, but the company opted rather to pre-pay various items that will ultimately be recognized as such once the development is complete.  

EPS was $0.07 versus $0.09 down due to an increase of shares outstanding of 35%. During the three months ended March 31, 2017, the company received proceeds of $363,755 from a private placement, once again increasing shares outstanding. As of May 4, 2017 there were 21.56 million shares outstanding, an increase of 777,000 shares from the average number reported for Q1. 

Beyond the company’s operating goals its two main priorities are to improve the liquidity of the company’s stock and resolve its litigation. The company has now achieved the shareholder’s equity criteria to uplist to NASDAQ and its hopes to resolve its litigation within the next few months. After the uplisting, we believe that the company may do an equity raise late this year marketed to institutions.

Outlook

During 2017 the expectation is that the ‘core’ CreateApp Tool kit will continue to grow substantially (~20%-30%) while new accounts signed in 2016 will begin to reflect a small but material portion of revenue (~10%). The geography most in focus is Indonesia which is a >$900M annual opportunity including subscriptions, e-commerce and premium services. Singapore will also remain a key market with our DPEX partnership and, finally, in-store beacon opportunities are expected to begin to gain traction. 

We expect revenues of $15.1 million and non-GAAP EPS of $0.05 in 2017 versus $13 million in revenue in 2016 and non-GAAP EPS of $0.07. By year end the stock could be worth $6.79 per share based on an industry average EV to sales of 6.1X and an estimated $26 million in sales in 2018. 

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