Q: Can you reflect on their q3. I know it's not great but does the first time ever positive ebitda give it a heartbeat if the trend continues.
5i Research Answer:
The first EBITDA is encouraging. EGLX has de-prioritized low margin business, and this resulted in a giant drop in sales, from $45.6M to $16.8M. Margins though expanded to 70.3% from 36.7%. But debt has increased again, and it is still expected to lose money on a net basis for a while. Cash flow is not signficant, and as debt creeps up so does risk. IF it can maintain these higher margins AND start seeing revenue growth, we might be more interested. But for now, it is too small, too risky and too late in the year (tax loss selling) for any consideration.