jimsum

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    • CIBC Research Worried About Sandvine [view article]
      I think CIBC has the wrong idea about how Sandvine earns revenue. Most of Sandvine's revenue comes from new customers, not existing ones. Sandvine did so well the last few years because they landed a few huge customers that needed to buy hundreds of boxes from Sandvine; after the initial big purchases, the ongoing service revenue is not very significant (yet).

      Sandvine management keeps telling everyone that revenue will be lumpy. Big new contracts don't necessarily line up so that new orders for hundreds of boxes immediately appear when the previous big order is filled. Sometimes quarters will go by without any new huge orders, sometimes there will be multiple huge orders at the same time.

      Eventually, if the competition doesn't beat them, Sandvine will have enough customers that service and upgrade revenue will outweigh revenue from new sales. Then investors should expect that quarterly revenue will be stable and predicatable; until then, we should expect high volatility as Sandvine gains new customers. Forget about how this quarter compares to previous Sandvine results; the important question is how Sandvine's latest quarter compares to the competition.
      Apr 08 11:22 AM
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