Big Trouble In Big Un

I am totally staggered by this BIG situation, but I’m late to this story. Although I thought the Tipsly transaction was unusual, I didn’t pick any problems with BIG and in fact I had a hard look at its books late last year and I couldn’t see any obvious warning signs. So I did not tip off AFR, I do not have and have never had any kind of investment position in BIG, long or short.

I wrote last month that I thought Getswift (ASX: GSW) was in deep shit with the regulators. I know that several people reported them and their adviser firms to ASIC for possible breaches of the Corporations Act.  At the time I thought Getswift and it’s onetime $700m market cap were pretty ‘special’. I didn’t think I’d see anything like it again for quite some time.

Then along came Big Un Limited (ASX: BIG) which has totally blown Getswift out of the water. If Getswift was in deep shit, I think BIG is totally fucked. Totally. I think it is a zero and I think it never trades again. The latter statement is based on this little hint from the ASX:


I’ve seen maybe 30-40 suspensions at ASX’s pleasure (listing rule 17.3) but I’ve never seen those two little words. That’s the biggest clue that this is serious. You didn’t see those two words in the Getswift 17.3 suspension. Yet ASIC is inquiring here.


Even if you are still a believer in BIG, the simple fact that so much of this stuff was seemingly not released until the ASX forced them to is a huge red flag in itself, in my opinion.

Here is an abbreviated list of problems I spotted in yesterday’s announcement:

  • Response #5: Customer substitution

It appears that First Class Capital (FCC) advances cash to BRTV to fund a video. If the customer is unhappy and doesn’t pay, BRTV can substitute another customer in without penalty. This is bizarre because this (and a couple of other things, below) says to me that FCC is not incentivized to care about the credit quality of the people they sponsor. This is because BRTV appears to carry all the risk of the customer defaulting:

Response #29: At any time that a Default Event continues (and has not been remedied by BRTV) ….FC may:  …c) demand and recover any or all of the Secured Money from BRTV. 

Response #30: If a Default Event occurs, BRTV must indemnify FC against any loss resulting directly from an Offer Amount…

Although, that doesn’t completely make sense because Response #27 says “As such, BRTV does not guarantee the repayment obligations of the Customers.”

I understand that to mean that BRTV doesn’t have to repay the 12 x $1000 monthly payments for customers – it just has to repay the Offer Amount ($12000). Which isn’t much of a difference.

Response #34 says: “where BRTV simply stops using the Sponsorship Pool, FC agrees that BRTV has no further obligations in relation to contracts with customers which have been the subject of Final Acceptance by the Customer.”

Do these obligations include BRTV’s obligation to indemnify losses?  Where does the ultimate liability lie?

My confusion may be due to the pre- and post- acceptance phase from the customer. After the customer agrees to pay for the video, then collecting that seems to be FC Capital’s responsibility. Before that however, it appears to be BRTV’s issue. This is still a concern given most customers are in the pre-acceptance phase (more on this below).

So it is not certain what role FC Capital even plays – if BRTV carries all the risk, it should just extend credit to customers directly. However, that would have made its cash flows look really bad – paying the cost of creating the video up front and then only taking repayment over 12 months. BIG would also not have been able to grow revenues and cash receipts nearly so quickly.

As BRTV seems to be on the hook for repaying FC Capital, FC Capital has no real incentive to control its lending in my opinion – it can issue as much as it wants (up to $20m, subject to covenants) because BRTV will repay it and FC gets huge fees. In my opinion this is a very circular arrangement:

There has been some confusion (on my part also) whether this is a representative diagram. Here is an alternative explanation via website HotCopper that could also make sense.

I think BRTV carries virtually all of the risk, given the security over its assets as well as the fact that most customers (for which cash has been advanced) are still in the pre-approval phase. FC Capital can refuse any customers it wants (cherry picking the risks) and if that happens BIG has to either come up with another customer or refund the Offer Amount plus a 24% commission.

In my opinion this is not a sponsorship, but an extremely expensive working capital loan. There is an additional concern about this arrangement:

No business willingly gives away a 24%(!) commission to their financier while simultaneously indemnifying their financier against losses. This to me signifies that BIG is desperate and that most of the power in the arrangement rests with FC Capital. I also think this means that the BRTV business is lower quality than was otherwise apparent, because it implies an inability to seek alternative sources of finance.

It is staggering that the payment terms have not been disclosed previously (as far as I know). In this light, I think BIG’s Response #15 “SME financing is broadly used and well understood in the market” appears disingenuous. It’s factually true, but I doubt SME financing on BRTV’s precise terms is widely used, if at all.

Given that FC Capital has security over all of BRTV’s property, it looks as though BRTV is basically borrowing against its assets (at 24%p.a.) in order to extend money to customers that then comes back through the front door as revenue and cash flow. FC Capital holds onto 65% of all monies and BRTV is apparently obligated to indemnify them, so FC Capital appears pretty unlikely to have to bear any losses.

In my opinion this is a concerning arrangement and smacks of desperation. Notably this is not recorded as a loan on the balance sheet, and I think that that has the general effect of overstating BIG’s financial position, the quality of earnings, and the amount of growth that has occurred.

It also seems unusual that FC Capital is only financing 35% of receivables, since it keeps 41% as security. Many debtor finance programs will offer 50%-80% of receivables or more. In the ASX announcement (p.39, Q25 (b) ), BIG said that $19.8 million is held as Security Deposits. This compares to ‘approximately $19 million’ of the Sponsorship pool that has been used. It is not clear why ~104% of the Sponsorship Pool is held as security, given the security deposit is supposed to be only 41%. I’m not sure if I understand this correctly, but why is BIG paying 24% per annum for an arrangement where its financier appears to have more than 100% collateral?

On a different topic, hypothetically speaking, if BRTV had no real customers using the FC Capital arrangement (and I am not saying that it doesn’t) then this would be a scheme to inflate revenues and cash flow. That is why some of the media reports of customers not being aware that they have open accounts are concerning.

Description of the First Class Capital deal:

In the original announcement in Dec 2015, the wording of the FC Capital deal doesn’t really explain the true nature of the arrangement, in my opinion. It indirectly hints at debtor finance, but it doesn’t even explicitly state that it is a debtor finance arrangement (where FC Capital extends credit to BRTV based on BRTV’s receivables from customers).

The use of the word ‘sponsorship’ of customers I think is materially misleading, especially in context of the terms which make the arrangement look a lot more like a working capital loan – not debtor finance – since FC Capital appears to advance cash before a paying customer is secured (more on this below).

To me this is another big red flag as the wording has (whether intentionally or unintentionally) significantly clouded the true nature of the arrangement, in my opinion.

Response #8: Videos add value to BIG even when customers don’t pay for them.

Even when customers don’t pay for their BIG videos, these videos have ‘material long term value’ because they populate the video review platform and content library. They make BIG’s platform look ‘lived in’, I get that.  But how is BIG going to “develop strategies for using these assets to generate revenue” ?  If the customer doesn’t like the video, they wont use it.  In my opinion, it is hard to see who is going to subscribe to advertising videos of random restaurants.

Plus, given that the customer already paid for their videos, is BIG really going to ask them to pay some sort of annuity revenue for its continued use as well?  Doubt it.  Videos have a limited shelf life even when used in advertising. In my opinion, they are consumed and then after a while they are old.

Response #54, and #60 (Q.1-3):  BIG did not correctly disclose the arrangement to issue discounted shares to FC Capital.

I think this is a red flag, administrative error or not. Given the terms of the financing I describe above, the subsequent decision to issue shares to FC Capital without proper disclosure is concerning, especially given it took a year to execute the agreement (during which time the value of the shares rose manyfold).


I thought the Tipsly acquisition was pretty concerning.

  • Tipsly website registered in February 2017
  • Deal negotiated in May 2017
  • Tipsly LLC wasn’t registered until five months later on 20 October 2017 (to Tyler & Ryan O’Rear)
  • Tipsly was acquired for 3m BIG shares at $0.60 plus another $2.4m in cash and scrip
  • An additional 1.8 million (valued at over $3m at time of issue) BIG shares were paid to Thirty Three Affiliated Holdings, (of which Doug, Cydney, Tyler, & Ryan O’Rear are directors) in return for ‘services’. It’s not clear what this was for, nor what services were provided that weren’t already included in the Tipsly transaction.
  • Until very recently there were videos on Youtube (via Brandon Evertz’ YouTube account) that showed Doug O’Rear at social events with (presumably?) the BIG CEO, suggesting a social connection:
Here is the first link and the second link (videos have been removed).

The above videos were already hidden on YouTube. They were apparently embedded on the Big Review TV website using YouTube and you had to have the exact link to watch them. (They are now completely taken down).

I’ve been told that Big Un’s explanation for the timing of the LLC creation was that Tipsly was not set up for acquisition, but something about that does not sit right with me. I can’t think of a good reason why Tipsly would not already have its own LLC, especially since it was supposedly just about to launch when BIG offered them a deal.

Others have pointed out issues with the seeming quality of Tipsly’s tech:



If you look around the Tipsly site there’s certainly not much there.  I have been checking for a while and I haven’t been able to find the app in either the Android or Apple store. (I don’t have an Apple or an Android device though, so if you check today and that has changed, please let me know).

Questions from the Second Aware Letter

This part appears to show a considerable amount of churn at BRTV’s customers. There are apparently minimum conversion ratios (that didn’t seem to be specified) to prevent BIG holding on to finance forever, but they do not appear to be a high threshold.

If I understand correctly, seemingly only around 1 in 5 customers (791 out of 3,518) that is presented with a video actually accepts it (accepts the agreement to pay FC Capital):

That suggests that BRTV has to do a lot of sales activity to win replacement customers, whatever they say about their pipeline. This part is even worse:

So $18 million of last quarter’s cash flows came from FC Capital for POTENTIAL CUSTOMERS.  These are customers that have “not yet accepted a video but have not been declined…”. As we saw in the above table it looks as though only around 1 in 5 Potential Customers go on to become an Accepted Customer. This implies a significant contingent liability for BRTV in the event that it cannot find customers to replace them. To put it another way, if BRTV for some reason cannot replace customers, I think its cash flows could be something like 80% overstated (possibly even more, given that all cancellations seem to require full repayment, plus the 24% commission to FC Capital).

Another concern in my opinion is that the other $2.3 million cash receipts came from ‘pilot sponsorship programs’ in the USA. Remember how I said the FC Capital sponsorship program looks like an expensive working capital facility? I wonder if these two US sponsorship programs are established on similar terms.

If so, that would be a concern, in my opinion, because it could suggest that basically 90% of BIG’s cash receipts last quarter (There was a further $2m from general advertising) were from entities that are financing BRTV customers via BRTV basically borrowing against itself. Also, just under two thirds of BIG’s reported cash at bank is actually held in security by FC Capital.

I think it would be a grave cognitive error for an investor to attempt to rationalise or explain away this situation. If you are not concerned about the recent disclosures then, in my humble opinion, you really, really should be.

P.S. and if you got to the end of all that and you’re either a) asking WTF is going on or b) thinking that 10foot is an outrageous downramper with no grasp of what a good business looks like, ask yourself this simple question:

Why does BRTV have to borrow at 24% per annum to grow its business?

I have no, and have never had, any financial position whatsoever in any company mentioned, listed or unlisted. This is a disclosure and not a recommendation.

10 Replies to “Big Trouble In Big Un”

  1. Great research, I admire the effort, although I suspect the time could have been better spent elsewhere!!
    As I mentioned on Twitter, unless we are back in 1985, no company should be borrowing at 24%!

    BTW, no TIpsly app on the Apple Store.

  2. This farce with BIG also demonstrates a failing in the transition of security documentation from the ASIC document management system (which anyone was able to search for a fee) and the present Personal Property and Security Register system managed by AFSA when the Personal Property and Security Act came into being.

    If this issue had arisen in the pre-PPSA system era it would have been very easy for anyone interested to pay a fee and get a copy of the FC Capital charge documentation from ASIC (even a free search of the ASIC register would have shown there was a charge held by someone against BIG). Maybe someone would have picked up these issues with BIG much sooner and could have alerted ASIC.

    Under the current system, as far as I am aware, only “interested persons” as defined in s275(9) of the Personal Property and Security Act are able to obtain a copy of the charge documents (which doesn’t include investors) and even then financiers can be cute and enter into agreements with borrowers making the agreement confidential.

    Maybe an area for law reform (either include investors as interested persons or go back to a system whereby AFSA now needs to store copies of charge documentation and make them available for access to anyone who pays the necessary fee).

    1. I had a read of that, Ryan tweeted it to me. I put a link to it right under the diagram so people can look further. He could be right, I agree it is complex.

      However I think the arrangement still looks a lot like a loan, I think BIG still carries a lot of the risk (because FC Capital can choose which customers to approve, and has all of its covenants etc) ,and I think it also doesn’t really explain why cash appears to have been advanced to ~80% of customers that haven’t been approved yet. Also, despite 41% of the fee supposed to be held as security, BIG says in its ASX ann (the 4th last page) that $19.8 million is held by FC as a security deposit. This is 104% of the ‘approximately $19 million’ that has been extended for sponsorship?

  3. Well it is a loan – from FC to the customer. It is up to BIG to find the customer and introduce them to FC. Once customer is happy with BIG product and FC agree, then FC is responsible for any problems with customer payments. If the customer pulls out for whatever reason beforehand, it is up to BIG to either pay a penalty or find an unencumbered customer to replace. BIG state they have never had to pay the penalty.

    BIG has essentially packaged up their risks and sold their debt to FC for 24%. In return BIG get a down payment first thing and the rest of the revenue later. FC takes on the risk of bad customers. Audited half yearly correctly shows that the costs and cash are deferred ie they don’t appear on the balance sheet immediately but are counted only progressively as the twelve months go by. Unaudited 4Cs correctly show the cashflow, even if some would prefer that the 4Cs provided more information as to whether the cash is held eg security deposits, etc. The ASX will probably have a ruling on that, I suspect, but it’s not a huge deal for me.

    Anyway, I’m sure you know all that. I disagree with some of your conclusions and, indeed, some of your workings. But I’ve spent many hours on this and it’s been a real struggle to understand. I think it’s a clever idea to marry the financing package with the video product, the two complement each other. I’ll leave it from here, you do good research and I enjoy reading your notes, even if in this case we have a different opinion.

    1. David, thanks for being so civil in discussing this, I appreciate that. Will respond to both of your comments here.
      (For benefit of others who see this comment, this comment is all my own opinion based on the public announcements, and you should DYOR. I continue to have no position whatsoever in BIG.)

      First, you could be right about customers waiting to confirm acceptance. I am obviously suspicious, but I can’t prove it either way. However, I think that this does show
      that the arrangement is a loan, and more importantly it shows that it is a loan directly to BIG/BRTV:
      >BRTV finds customer & shoots video
      >FC Capital gives some money to BRTV and holds rest as security
      >Customer accepts or rejects paying FC Capital
      >If customer rejects (and BRTV presumably has minimal say in this decision) then BRTV has to repay the money or find a new customer.
      >Therefore BRTV is liable unless a new customer can be found.
      >Therefore I think the loan is not directly to the customer. The liability is really with BRTV until they can pass it off to customer.

      The customer is not on the hook until after acceptance. BRTV hasn’t sold its risks to FC Capital until after customer acceptance, which is why I think that the 80% ‘potential customer’ figure is so critical here. It’s a big contingent liability.

      Second, I don’t think the cash inflows are shown transparently. 2/3rds of the cash inflow subsequently flows back out to FC Capital as security and commission (24% commission, 41% security). This may be in accordance with GAAP (I am not sure) but until the announcement on Friday investors were clearly in the dark as to the nature of the whole arrangement.

      Third, I think that the quality of the balance sheet has been overstated as well. Again I don’t know whether this is in line with GAAP, but it seems investors didnt know that 2/3rds of their cash was held as security against basically what looks like a ‘loan’ to BRTV. (I think it is a loan, but I am referring to the loan/debtor finance/sponsorship arrangement they have).

      Fourth, this may be a question you can answer for me. BIG says FC Capital takes a 41% security deposit yeah? The sponsorship that has been extended is ‘approximately $19 million’, so why does FC Capital have $19.8 milion (104% of sponsorship) of BIG’s cash held as security? If BRTV went to a big bank and said ‘here’s $19.8 million cash as security, we want to borrow $19 million from you’ surely the rate would be well below 24%?

      Fifth, if this arrangement was so obviously beneficial and value-adding, why wasn’t it disclosed any time in the last two years? That’s the biggest part. This was all kept quiet which makes me wonder if the purpose of the arrangement was more cosmetic – to make cash flow and balance sheet look better.

      1. It’s a pleasure to discuss with you. I definitely do not know everything about all this, even though I’ve read the release a few times. Still, my answers to your points above:

        (1) Re: You conclude “The customer is not on the hook until after acceptance. BRTV hasn’t sold its risks to FC Capital until after customer acceptance, which is why I think that the 80% ‘potential customer’ figure is so critical here. It’s a big contingent liability.” That’s a fair comment, I think. My view: In the case of non-financed customers there is no issue. They pay a fee up front and then payments over twelve months. I think we would both agree this is not a loan at all, just normal business practice. This is the model used by larger customers and NFP organisations, as well as for some SMEs.

        The problem comes with SMEs who would like to see the product before putting any money forward, vs BIGs need for money in advance to cover costs. So this where the financing arrangement comes in. BIG is provisionally advanced money by the finance company who in turn, for a cut of the money, takes on responsibility for the customer’s continuing payment. If this all occurred on the same day this would be fine and dandy, but there is a gap of approx 8 to 12 weeks between provisional acceptance and final ok from the customer. So far there has been no problem with BIG convincing customers to taking the final step. But I can see the argument that it is, for this 8 to 12 week period, a grey area. I am not intimately familiar with GAAP to give an opinion. I’ve seen two opinions from (self-proclaimed) accountants, each with an opposing view. It wouldn’t surprise me if this issue is the focus of ASX attention.

        Having said all that, and conceded your point, at this stage I don’t see a concern with it for myself because of the outstanding success that BIG has had so far converting customers, because of the limited time frame (120 days before BIG pays a penalty, so far this has never occurred), and because of the limitation of the capped amount of $20 million. However I disagree completely when you characterise it as a loan (more on this in point 3).

        (2) Two-thirds of cash flows out to FC as commission (24%) and security (41%). Not sure I agree with you there. As I understand it the cash is sent by FC to BIG, but held in accounts nominated by BIG but secured by FC. Obviously both parties are securing their interests. You seem to be saying that the money becomes FCs once again but I disagree. I see it that the money is BIGs but FC is able to hold it as security against any future problems by BIG. Again, GAAP should be the arbiter here but this time I think I am on safer ground.

        (Editor’s note: Paragraph 20 d) iii of ASX response says that the offer amount is paid into an account nominated & controlled by FC Capital.)

        (3) Quality of balance sheet overstated… what looks like a “loan” to BRTV. As far as I can see, BIG does not have a loan to FC. Take the case where FC is not involved, where the customer pays in advance ($395 from memory). This advance is clearly not a loan from the customer to BIG with the expectation that it shall be repaid, it is an advance payment on total costs. No argument there, I am sure.

        So now consider when FC are involved and the customer goes through with the project. The initial costs (grossly inflated now) are advanced to BIG in anticipation that the customer will go through with the project. This is quite clever, and is a cornerstone of BIGs success. If the customer goes through with it, it is still an advance, not a loan – it will never be repaid.

        Lastly consider the case where FC is involved but the customer does not go through with the project. In this case FC needs to have an income stream from a customer or wind up their loan. To that end BIG can pay back an amount equal to the advance plus a penalty, or substitute another customer. I would still argue that this is not a loan because of the way it is structured and because this is a rare event. It is a penalty payment for non-performance or non-completion of a transaction. It is a bill to be paid, not a loan to be repaid. Note that the initial advance is much higher than for a non-FC customer – I expect that this is because it can cover not just one customer but two, eg first customer declines and is replaced by another.

        Semantics you say? Well accounting and law is full of such semantics. I think this is defensible because it comprises a very small part of BIGs financial transactions. The counter-argument – to call it a loan – extends the word loan to a much larger range of transactions that are clearly not loans.

        As to “quality of balance sheet” – I’m not sure if you are referring to 4Cs (cash flow statements) or audited yearly and half-yearlys. I would say that both have been quiet strictly correct in their handling of this. The cash flow is the cash flow, nothing more. The audited accounts clearly show that revenue (and costs though these are small) are deferred. yes, I’m sure we could ask for/wish for greater clarity and a breakdown, but that is probably not the place in a 4C which is a fairly simple document. The audited accounts could provide more information, though.

        (4) I think you answered your own question, this can’t possibly be right. As I understand it, the 35% is advanced immediately to BIG and the 41% security is held in account nominated by BIG but secured by FC pending finalisation of accounts. FC keep the 24% for themselves.

        (5) Why wasn’t it disclosed? Was the purpose of the arrangement …cosmetic to make cash flow and balance sheet look better? – I’d say that this is a big part of BIGs strategy and commercial in confidence. They have come up with a way to get SMEs to invest in video by tying it together with interest free finance, and no obligation until the final product is seen and accepted by the customer. I don’t think you could build a large client base in any other way. Social media works on having many users operational, so getting started is phenomenally difficult. Traditional social media got around this by offering free membership eg Facebook, etc. but that won’t work as video costs money to produce professionally and well.

        The argument against it is that if customers don’t sign up for the product then it won’t work. However that’s fairly obvious for any company – they’ve got to make a good product or they fail, this is no different. The FC tie up costs BIG 24% of revenue but saves them from having to deal with bad debtors and paying interest themselves, and probably also saves on looking after many small accounts. s long as the non-sign up customers remains manageable there are no further costs, and so far BIG says they have never paid the 24% penalty. By capping the amount that BIG can use this way they are forced to have some SME customers non-financed and this provides a buffer. Of course they still have their large customers, their NFP customers and their overseas customers as well.

        Now that I understand it better, I’m actually more inclined to BIG than before. I can see how difficult it would be to get SMEs to pay money then wait for 8 to 12 weeks to get a product which they probably think they don’t even need. BIG is able to let them see it first and pay it over twelve months interest free, as well as offering a line of credit to the SME from FC. It’s brilliant. I don’t think you could succeed as a start-up video social media company without it.

        Apologies for the length!

        1. You raise some good points. I think the difference in our views comes from the fact that I’m focused on what happens the money *before* a customer signs up, and you’re focused on how the arrangement looks after the customer has signed up. Which is a fair difference given that BIG has apparently had no problems finding customers in the past.

          I think I’m fair to characterise it as a loan though. I think we both agree it’s definitely not a ‘sponsorship’. I also don’t believe it’s a debtor finance/factoring facility, because in that situation banks advance a % of money based on a company’s receivables. However since BIG’s customer hasn’t agreed to sign up yet, I don’t think it would have any receivables to borrow against. (also when the customer signs up, BIG immediately assigns the right to repayment, the receivables, to FC Capital). So I think clearly it’s not debtor/receivables financing and I think you would agree.

          The reason I think it is a working capital loan is because *before* the customer signs up BIG has full liability.
          >Big gets prospective customer
          >FC extends money
          >Until customer signs up, Big is liable to repay money plus commission (‘interest’). This surely meets the criteria of a loan? And given that all of BRTV’s assets are secured against it, I reckon it’s a loan.

          >Customer signs up and takes the liability from Big.

          Also in the ASX announcement, the security deposit is paid into an account nominated & controlled by FC Capital. This is stated at response 20 c) iii. in the ASX response. So the security deposit is definitely not BIG’s money prior to customer sign up.

          Invert the good things about this working capital loan. What happens if no customer signs up at all? BIG a) loses $19.8 million cash that it counts on its balance sheet, AND it has to repay (I think) 59% (the 35% it received, plus 24% FC Capital’s commission) which is worth however much. So if that happens, admittedly it is a worst case scenario, but if that happens BIG will see like a $30m-$40m negative hit to its balance sheet to a negative cash position. I am not sure if ‘leverage’ is the right word to use, but I think this is hidden leverage.

          I am not trying to say there’s anything wrong with a working capital loan per se, indeed it would be natural for BIG to take one. However by recording the ‘loan’ the way that they do – and by including FC Capital’s security deposit on BIG’s balance sheet, which I think was misleading before the latest disclosures, they hide this leverage risk considerably.That’s why I believe this has a ‘cosmetic’ purpose.

          1. I appreciate the conversation, good for both of us. I agree that we seem to look at it from two different angles, and for the moment it is a bit of a stalemate. I look forward to any guidance from the ASX on GAAP applicable to this situation, I think that will clarify things enormously; it should at least specify how the cash balances are to be accounted for.

            I do think it is somewhat pointless to examine a scenario where no customers sign up. I don’t think any company could survive if they had zero customers. I hasten to add that I’m pretty sure you’re not stupid and that wasn’t really your point. I assume you really mean to examine the case where the sign up of new customers reduces or collapses, and to determine the point at which the company starts making a loss. This information would be very useful to know – can they withstand a drop of only 10% (bad), or a drop of 50% (resilient), for example. However I suspect we are unlikely to ever know this much detail. Since BIG also has a revenue stream from non-financed customers this does provide a buffer; I’m sure you know that.

            I look forward to seeing the (unaudited) half yearly tomorrow. As long as I see customers continue to purchase ie becoming full customers, and to see increases in revenue (which will strip out all the deferred revenue) I shall be content. I still think this company is expanding in both revenue and customer terms, however tomorrow is another day and I could be wrong; it’s good to keep an open mind.

            I look forward to reading your next post on BIG, either being an “I told you so” or perhaps a modified outlook based upon new information. Not blaming you for the conclusions you draw on this article, it is what it is and your opinion is based upon what we know at the time. Shows how confusing it is when two people read the same stuff and come away with different conclusions. Kindest regards, etc.

  4. Oh, sorry, I guess I should raise specifics rather than speak in generalisations. So, for example, you say that: “$18 million of last quarter’s cash flows came from FC Capital for POTENTIAL CUSTOMERS. These are customers that have “not yet accepted a video but have not been declined…”.” As we saw in the above table it looks as though only around 1 in 5 Potential Customers go on to become an Accepted Customer. ”

    Have you considered that videos take several weeks to organise, shoot and edit? I believe the company guidance to customers on their website says that after payment a team will be onsite in 6-8 weeks (or was it 8-10?), then a further 3 weeks for editing before the final product. The customer then has to review the product, take time to do re-edits, consider their options, etc.

    Since the agreement with FC was only signed a few months ago, and since the numbers really cranked up in the last quarter, your low number of acceptances “1 in 5” may simply be customers waiting for their video before confirming acceptance.

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