Back in 2019 we wrote a bullish report on Gatekeeper Systems Inc. (GSI.V) (GKPRF) when it was trading at $0.18. A little over a year later and it was up over $1.00. We are looking to repeat that magic as the stock rose 44% to $0.31 today on news of outstanding earnings. We are up to 1,022 followers on our ValueTrades blog despite not giving out a lot of alerts, a fact that we think is indicative of a successful, diligent and prudent stock picking history. If you like our picks you can also follow this blog by clicking the follow button on the top of the left hand panel. We have 120 followers so far on here. You can also follow us on Twitter @StockTradePicks which has over 5,000 followers.
From today's press release:
Gatekeeper Reports $9.7M Revenue, $1.9M Net Income, 212% YoY Growth in Fiscal Q2 2023
Abbotsford, British Columbia--(Newsfile Corp. - April 19, 2023) - Gatekeeper Systems Inc. (TSXV: GSI) (OTC Pink: GKPRF) ('Gatekeeper' or the 'Company'), a video and data solutions provider for public transportation and smart cities, reports its financial results for the three and six months ended February 28, 2023.
Highlights for Second Fiscal Quarter Ended February 28, 2023:
- Revenue for the three and six months ended February 28, 2023 was $9,685,773 and $14,570,831 respectively, the highest in the Company's history and compares to $3,104,308 and $5,803,897, respectively, for the three and six months ended February 28, 2022, representing an increase of 212% and 151% respectively;
- Gross margin for the three months and six months ended February 28, 2023 was $4,545,579 and $6,091,697, respectively, the highest in the Company's history, and compares to $981,111 and $2,700,550 for the same prior year comparable periods, representing an increase in gross margin of 363% and 126%, respectively;
- Gross margin as a percentage of revenue for the three and six months ended February 28, 2023 was 47% and 42%, respectively, compared to 32% and 47% for the same prior year comparable periods;
- Total comprehensive income for the three and six months ended February 28, 2023 was $1,865,904 and $1,779,890, the highest in the Company's history, and compares to total comprehensive loss of $666,208 and $483,115 for the same prior year comparable periods;
- For the trailing twelve months ended February 28, 2023, revenue was $28,798,222, gross margin was $12,699,960, and total comprehensive income was $4,192,185;
- At February 28, 2023, the Company had working capital of $12,233,848 and approximately 91.4 million shares outstanding.
Management Commentary
Doug Dyment, President and CEO, commented, "Our financial performance in the second fiscal quarter of 2023 was record-breaking in all aspects. We are witnessing significant growth in both the transit and school segments of our business. Our Platform as a Service (PAAS) business model is proving to be very successful in increasing our revenues on a per bus/train basis and is solidly contributing to our evolution as a data company. During the quarter we increased the installed base of mobile data collectors to more than 47,000 and we successfully completed a $4 million contract which was one of the largest in our history. During the quarter we launched AI Dash Cam with video analytics for improved safety which is receiving strong customer interest."
Selected Financial Information
| For the three months ended | For the six months ended | |||||||||||
| February 28, 2023 | February 28, 2022 | February 28, 2023 | February 28, 2022 | |||||||||
| Revenue | $ | 9,685,773 | $ | 3,104,308 | $ | 14,570,831 | $ | 5,803,897 | ||||
| Cost of Sales | 5,140,194 | 2,123,197 | 8,479,134 | 3,103,347 | ||||||||
| Gross Profit | 4,545,579 | 981,111 | 6,091,697 | 2,700,550 | ||||||||
| Gross Margin | 47% | 32% | 42% | 47% | ||||||||
| Expenses | 2,404,408 | 1,953,505 | 4,569,129 | 3,656,644 | ||||||||
| Operating Income (Loss) | 2,141,171 | (972,394 | ) | 1,522,568 | (956,094 | ) | ||||||
| Total Comprehensive Income (Loss) for the period | $ | 1,865,904 | $ | (666,208 | ) | $ | 1,779,890 | $ | (483,115 | ) | ||
| Earning (Loss) per share - | ||||||||||||
| Basic | $ | 0.02 | $ | (0.00 | ) | $ | 0.02 | $ | (0.00 | ) | ||
| Diluted | $ | 0.02 | $ | (0.00 | ) | $ | 0.02 | $ | (0.00 | ) | ||
| February 28, 2023 | August 31, 2022 | |||||||||||
| Total Assets | $ | 18,303,587 | $ | 23,016,204 | ||||||||
| Total Liabilities | 3,938,642 | 10,470,109 | ||||||||||
| Total Shareholders' Equity | $ | 14,364,945 | $ | 12,546,095 | ||||||||
Full details of the financial reports and operating results for the fiscal second quarter ended February 28, 2023, are described in the Company's unaudited interim consolidated financial statements with accompanying notes and related Management's Discussion and Analysis, available on SEDAR at www.sedar.com.
Revenues, gross margins and net income are all up substantially. Liabilities have cratered as the company has been dedicating earnings to paying off debt. A smart move in a rising interest rate environment. The $1.9 million in net income translates to $0.02 EPS. The $9.7 million in revenue for one quarter compares quite well to the $28.3 million in market cap at $0.31.
Annualizing these numbers and you get an EPS of $0.08 and revenue of $39 million. GSI doesn't have a lot of seasonality to its figures, but the second quarter ending February tends to be the weakest quarter when looking at 2021 and 2022. So if it can repeat or better these numbers in future quarters, this would justify at least a doubling in the stock price. An annualized EPS of $0.08 would lead to a very reasonable multiple of 12.5x in order to see the stock return to $1.00 again.
Disclosure: We are long GSI.V
