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Thursday, January 28, 2021

InterCloud Systems Inc (OTCMKTS:ICLDD) Dives as Focus Turns to Debt

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InterCloud Systems Inc (OTCMKTS:ICLDD) is a micro-cap stock that has been slammed to the downside in recent action. We have noted a number of times in the past that ICLDD faced a “quintessential battle” with its bleak balance sheet. The debt has been an overwhelming burden that implies a sea of potential dilution. However, ICLDD also has a strong path of revenue generation that must be taken into account to understand the full story here and appreciate the true outcome distribution.

As a case in point, we would note the  latest press release, in which it was revealed that ICLDD was recently awarded over $1.0 million in new contracts for professional services for new and existing customers. A majority of the work is expected to begin immediately. Mark Munro, CEO stated, “we are pleased with the continued flow of new business. I am personally, along with the Board of Directors and our management team committed to our continued restructuring. As we have previously reported, we continue to reduce debt, salaries and other SG&A expenses. Our near term goals continue to focus on growing revenue, fixing our balance sheet and becoming cash flow positive.”

InterCloud Systems Inc (OTCMKTS:ICLDD) offers cloud data and network management and security to telecommunications companies. That’s the gist here.

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As the company tells the story, it provides “end-to-end IT and network solutions to the telecommunications service provider and corporate enterprise markets through cloud platforms and professional services in the United States and internationally.”

ICLDD operates through four segments: Applications and Infrastructure, Professional Services, Managed Services, and Cloud Services.

According to company materials, “InterCloud Systems, Inc. is a leading provider of cloud networking orchestration and automation, for  Software Defined Networking (SDN) and Network Function Virtualization (NFV) cloud environments to the telecommunications service provider (carrier) and corporate enterprise markets through cloud solutions and professional services. InterCloud’s cloud solutions offer enterprise and service-provider customers the opportunity to adopt an operational expense model by outsourcing cloud deployment and management to InterCloud rather than the capital expense model that has dominated in recent decades in IT infrastructure management.”

As noted above, ICLDD just announced another deal that should push up the top line. However, at this point, the market seems more preoccupied with the dilutive potential implied by the company’s obligations. As we have noted in the past, it will take some serious convincing before investors are going to be able to see past that and around the next corner to appreciate the growth potential that may or may not be inherent in the company’s strategic model of operations.

As we have noted in the past, it will take some serious convincing before investors are going to be able to see past that and around the next corner to appreciate the growth potential that may or may not be inherent in the company’s strategic model of operations.

The chart shows nearly -30% stripped out of share values of the name over the past week of action. That said, ICLDD has a track record that includes a number of dramatic bounces.

What’s more, the stock has registered increased average transaction volume recently, with the past month seeing above 210% above the average volume levels in play in this stock over the longer term.

At this time, carrying a capital value in the market of $2.32M, ICLDD has a stash ($816K) of cash on the books, which must be weighed relative to about $34.7M in total current liabilities. One should also note that debt has been growing over recent quarters. ICLDD is pulling in trailing 12-month revenues of $74.3M. However, the company is seeing declines on the top line on a quarterly y/y basis, with revenues falling at -21.6%. We will update the story again soon as further details emerge. For continuing coverage on shares of $ICLDD stock, as well as our other breakout picks, sign up for our free newsletter today and get our next hot stock pick!

Disclosure: we hold no position in $ICLDD, either long or short, and we have not been compensated for this article.

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