Hi 4321,
Is this what I am referring to? - Yes
Look back to the last quarterly report and you can see that Feeney is pointing it out via his non-GAAP adjusted P&L report. I've just been skipping over it all this time. Silly, no?
It's a non-cash item. Different sort of paper. Means Feeney is running a much tighter ship than I had recognised. And frankly, I don't wholly care for an accounting policy which puts stock dilution in the P&L. Wave's doing a lot better than I have previously contemplated. A $5.9m loss including these "expenses" becomes a $1.6m loss for the 9 months ending 30 Sept 11 when the non-cash expenses are excluded. And a $10.5m loss for the full year becomes a loss of $5.1m excluding only stock-based compensation.
That is how these numbers were reported by accountants a few years back.
Gives a very different sense of the balance of Wave's income and expenditure.
So, Wave has invested around $14-14.5m in its future business in 2011 via its R&D cost centre. It has issued stock with a value of $5.4m to employees. In combination, that represents around $20m of expense in the income statement, which shows a loss of $10.5m including those sums, along with the acquisition costs associated with the purchase of Safend (which likely represent an expense of around $1-1 1/2m).
Acquisition costs don't repeat. Stock compensation expenses are a different sort of paper. R&D costs are expensed in the current period but the income they generate will come in future periods at extremely high gross margins.
Meanwhile, Wave has had a relatively tough quarter, cashwise, but not something it cannot withstand.
It's a quarter that disappointed to the tune of $1m on the top line. Nothing much else that is so surprising. Certainly not time to panic about the company's future, which I view through the prism of the DoD opportunity which is coming close to fruition.
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