APDN up 27% as it Reports Record Q4 Revenue of $4M, a 517% increase over Q4 2014, and 75% Sequential Increase over Q3


APDN filed their 10-K tonight for fiscal year 2015 ending September 30th and they reported $4M in revenue for Q4 and $9M in revenue for the year. For the quarter, APDN beat analyst estimates by 100%. Q4 revenue was a 517% increase over Q4 2014. FY revenue of $9M was a 230% increase over 2014. Additionally, APDN reported an adjusted positive EBITDA of $213K – it’s first profit in company history.

The revenue numbers came EXACTLY in-line with what Ben Rabizadeh predicted on November 3rd in this article which was a rebut to the SeekingAlpha hit piece by The PumpStopper. Additional data:

Cotton revenue came in at just over $2M which was a 67% increase over Q3. Cotton pricing came in at 2.9 cents/pound. This anticipated drop was due to volume discounts which APDN guided for in the previous quarter. Cotton revenue was not deferred and was recorded as revenue when shipped. Please be advised, cotton is a seasonal business so we may see a sharp drop in cotton revenue until Q3 2016. The cotton season runs right through Q1 but to be conservative, we are assuming the Q4 sales were upfront sales which will cover customer needs through Q1. Hopefully we will find out we are being too conservative on this tomorrow.

Government Revenue
Government revenue came in at $880K for the quarter and $2.8M for the year beating by 100K for the quarter.

Vandalia Revenue
Vandalia revenue came in at $175K for the quarter assuming the same revenue recognition method used for cotton. This number was not reported in the 10K but was reported at an investors conference last week.

Other and DLA
“Other” revenue which includes revenue from DLA, surged over 100% sequentially to a record of nearly $850K. This was an unexpected beat by even StoryTrading’s predictions (beat by $320K or 60%) and while it could be due to a ramp-up in DLA, it is more likely due to an increase in business from one of it’s other verticals. The most likely candidates include DNANet, Polyolefins, Polyesters, or Auto.

Balance Sheet
APDN had $7.3M in cash and an additional $3.9M in accounts receivable as of September 30th and they recently raised $8.75M which gives them roughly $15M cash and no debt.

Revenue Growth
Back on November 3rd, StoryTrading published QoQ and YoY revenue charts which were just an estimate. As our estimate was exactly correct, the charts do not need updating (except to remove “est”).

APDNAnnual APDNQuarterly

Comments from the CEO in Press Release
A few important comments were in this evening’s press release:

Fiscal 2016 presents an opportunity for continued strong growth as the maturation of existing pilot projects become new drivers of revenue and as we further expand our penetration of our existing industry verticals. Our success in validating cotton supply chains, which are dispersed over large geographies and notoriously complex, sets the precedent for our deployment in other verticals from plastics to pharmaceutics. Our cotton initiative helped the company mature from providing a DNA product to evolving procedures and systems that complete the supply-chain ecosystem. We also expect to begin deployment of our On-Site DNA Authentication program for cotton, which should serve to mitigate the impact of cotton’s seasonality on our business. Subsequent to the close of the year, we undertook a capital raise that further strengthened our balance sheet, giving us the flexibility to pursue a broader range of growth opportunities. Given these and other initiatives, we expect further revenue growth in FY 2016. With an unmatched portfolio of DNAintellectual property and the ability to produce DNA at scale, growing adoption of our solutions by markets with substantial dollar-value opportunities and the financial resources with which to pursue them, we believe Applied DNA Sciences is excellently positioned to succeed.

What to Look for Tomorrow
During the cc tomorrow we’ll be looking for the following:

  • Guidance for Q1 ending December 30th. Last year they gave guidance for Q1 during the call. Q1 revenue last year was $1.24M. Since cotton is now seasonal, we are not looking for a sequential growth number off of the $3.8M reported in Q4. Anything above $1.24M should be sufficient for the market.
  • Guidance for Cotton sales in Q1 and anticipated pricing going forward off of a baseline 2.9 cents/pound
  • Cotton business is now seasonal so we will be looking for a new vertical to continue sequential revenue growth while we wait for cotton season to pick up again in the 2nd half of 2016. The most advanced program is Polyolefins. Last we heard, they completed the pilots and were scaling up with 2 customers to commercialization.
  • The pharma pilot program with a large Asian manufacturer should be complete or just about complete. Any positive news on this front will be a significant driver for the stock price.
  • We’ll be looking for updates on DNANet, Polyesters, and the auto dealer and manufacturing business. The silicone pilot just completed so we don’t expect anything significant from that. If commercialization is announced for silicone, this can also be a driver for the stock price.
  • Print and Packaging is also a vertical which could surprise.
  • Lastly we’ll be looking for guidance in the government and DLA verticals.

The conference call at 8:30am can be accessed here.

Ben Rabizadeh

About Ben Rabizadeh

I devised the Story Trading method to earn 5-100% returns from intraday to multi-month periods. I'm best at anticipating the next story & reading market emotions. Up 100% in 2013 & 200% in 2014.

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