Infinera filed an S-1 today, the link is here.
First impressions? I’m not surprised that the company isn’t generating an operating profit. But I am a bit shocked that their cost of goods sold is higher than their revenue. I need to spend more than 5 minutes looking at the S-1 but this one fact jumped out immediately.
I would love to read your analysis on this one. I haven’t spent a lot of time on the S-1, but it reads like nothing I’ve quite seen before.
It probably takes a good couple of hours to make any sense of this S-1 but there looks to be some very unusual revenue recognition policy at work. They claim invoiced revenue of $140m for 2006 of which $53m is recognisable in the year and the rest is upgrade packs, software upgrades and services such as training. It is difficult to see how they can sell this much training so they are either invoicing for substantial future software upgrades or they are selling systems that are expanded over time as a package, all of which sounds very challenging. In addition they are running a massive GM loss on declared revenue which must mean giving the base system away, AND they have the interesting concept of deferred inventory costs…
I look forward to your analysis….
Having just been through the S1 filling process the SEC is going to have quite a few questions for Infinera so don’t expect a listing any time soon.
Walk through the S-1 numbers for 2006:
VC $110M round last July,
605 employees
$58.7M Revenue
$(89.1M)=$(14.55/share)losses
Single major customer
Cash bal. 29.7M
Obviously IPO is driven by cash for survival.