NaaS Technology Inc. - NAAS

Raising some cash

Though I removed NAAS from my interest list back in December, they announced a newfangled profitability metric a few days ago and then priced a discounted stock offering this morning, which just makes me itch to provide some sort of comment.  Plus, I also mentioned it in a comment to a post by

Herb Greenberg

, and this truly is relevant.

The 6K that announced the offering reiterated the previously announced profitability metrics pretty much verbatim, perhaps in the hope that the market would overlook the cheap stock they were selling if they only told investors just how good they were really doing.

I’ll snip the parts of the press release I find to be important and then make a comment about each part.

NAAS is one of those foreign companies that doesn’t need to file timely financials with the US SEC, and the SEC for some reason is fine with that.  Why investors put up with it is another question entirely. 

So the last time NAAS gave us an update as to their financial situation was back in September when they updated us on the financials from the first 6 months of the year, so through June 30^th 2023.  Here we are in the middle of March 2024 and the most recent numbers we have are June 2023.

At the end of June the company supposedly had ample liquidity of $71M in cash plus $25M worth of receivables and then various other “financial assets” that add up to at least another $30M.  So they should have had north of $100M if not closer to $125M in some form of readily available cash on hand should the need arise, which would beg the question why they felt the need to do a discounted stock offering at this moment in time.  The stock is getting smooshed, but they apparently plan to release some really good year-end numbers, so why now?

If you look at the linked 6K you will notice that they had an operating loss of $61.6M through the first half of the year, though their cash flow statement only shows they blew through $13.8M on the operating side (look at the loan advances to a related party under the investing section for a fright).  So cash shouldn’t be in such dire straights at the moment, and if it is, $6M is a tiny band-aid for what they spend each quarter.

The quality and collectability of their receivables should be another cause for concern, btw.  If you look historically, in their 20F from 2022 they had $18.8M in receivables at year end, with 2021’s level around $5.5M, for a $13.3M year over year rise in receivables.  Revenues for all of 2022?  $13.5M.  So they basically collected zero cash from any sales during all of 2022.  How is it going this year?

At the end of June 2023 their receivables balance was up to $25M, so of the $11.7M in revenues they booked in the first 6 months of 2023, they collected only $5.5M in total.  Pretty horrible, but an improvement over 2022.

When can we expect some more updated numbers?  Last year they filed their 20F on May 1^st, but since this is a leap year, perhaps we will see their year-end financials by April 30^th.  According to the release, though, they still don’t really know how they did last year. They’re still providing a “range.”

Remember, revenues through the first 6 months were supposedly $11.69M and they are still looking for $44M to $46M for the year, which would be one heck of a back-end-loaded year, but nothing should really surprise anyone about what these folks decide to announce.

Oh, and about those metrics they announced.

Their “Net Take Rate” (NTR) has apparently turned positive.  Hooray!!! 

What exactly is an NTR?

The company’s primary business is an app that directs charging traffic to available chargers.  So if you have an EV that you want charged and you want to go someplace you don’t have to wait and where they have an opening, these folks will tell you where to go. 

How do they get paid? 

The EV charging stations that they have an agreement with will give them a cut of the bill for anyone they book to one of those chargers. 

How do they direct traffic to the charging stations that will pay them? 

They offer incentives to the drivers, and thus the NTR.

So all this is telling us is that for the months of January and February the company basically paid out less in incentive fees than they were able to book as revenues.  At another point in time prior to their accounting change this may have been called a “positive” gross margin, but now they just call it a positive NTR.

Which, in the end, isn’t really that positive at all.