Healthcare
BTN’s analysis of DOCS’s earnings quality identified several accounting-related factors that have recently boosted growth but appear to be temporary: 1) The boost to sales growth from falling Deferred Revenue may be difficult to maintain. 2) Rising Receivables are helping sales too. With DSOs at historic highs, this growth may be tough to continue. 3) Even with rising revenue, DOCS is still boosting stock compensation as a % of sales which it adds back to non-GAAP EPS. 4) Cash R&D and selling expenses are down as a % of sales and largely flat in dollar terms. 5) Passive interest income added 2 cents last quarter to Y/Y EPS growth. 6) Hefty share repurchases have lapped and taken away this source of 1-2 cents of EPS growth.
Edition: 209
- 18 April, 2025
Financials
The share price plummets nearly 75% after forecasts are slashed. Earlier this year, Alumbra Research had published a report highlighting numerous red flags in CABP's IPO prospectus. Most notably, they found the timing of its IPO to be highly questionable given 1) 26% of FY22 revenue and up to 51% of EBITDA would likely dissipate very soon due to changes in Nigeria’s currency policy and 2) CABP did not present a credible plan on how it was going to replace this lost revenue / EBITDA. Furthermore, CABP’s growth leading up to the IPO had benefitted significantly from volatility in other African currency corridors, which they believed was unsustainable. Other recent successful shorts from Alumbra include Alstom, Cerence and Doximity.
Edition: 172
- 27 October, 2023
Healthcare
The share price declined by 22% last month (and is down 41% since Derek Aherne turned bearish) after DOCS significantly reduced its FY24 revenue guidance. In Derek’s previous reports, he raised concerns that consensus revenue growth expectations appeared overly optimistic considering the firm’s declining NRR rate and net deferred revenue level. In addition, he believed that management’s decision to cease disclosing growth in the average number of modules and brands for its Marketing Solutions customers was a red flag given that they were expected to be key drivers of the company’s revenue growth and growth in these metrics had been deteriorating prior to the removal of the disclosure.
Edition: 169
- 15 September, 2023