Intrinsyc Technology goes from software to hardware

   Intrinsyc Technology is a junior technology company and one that is not covered often by this blog.But Intrinsyc seems to have transitioned away from software internet services to hardware,at least partially.Intrinsyc (ITC) says that it "is a leader of solutions for the development of embedded and IoT products"On August 9 it had it's second quarter results and it is clear that it's growth in revenues has levelled off.This is not too surprising as it's software products are now in a mature market and it's hardware products are still in the growing stage of the product cycle.Unfortunately hardware is a capital intensive product and Intrinsyc will have to invest more or make more acquisitions.However it is clear that it is introducing new products.       

The Growth Trajectory

Intrinsyc is making several kinds of computing modules.Their biggest seller appears to be the Open-Q embedded computing modules.But it has several types of computing modules as well as a hardware kit that it sells to individuals.Intrinsyc still sells some software services but not as much as hardware.Revenues were $4.6 million a 2% increase from $4.5 million in Q1.And revenues dropped from Q2 in 2016.Adjusted EBITDA showed a small drop from $113,000 to $85 ,000 in Q1 2016.                                   Revenues for 6 months were down from $9.1 million in 2016 to $9 million in 2017.While adjusted EBITDA dropped from $250,000 to $187,000 in 2016.However ITC is still on track to hit almost$1 million in adjusted EBITDA for 2017.

Options for the Future

It is this blogs opinion that ITC must make a few acquisitions or be acquired partially or totally.However no decision has to be made immediately.If hardware revenues don't pick up by the end of 2017 or Q1 in 2018 they had better have a small acquisition lined up.For example, DCM has Iotum telephony technology and would be an excellent hardware combination.ITC has the ability to make a sizeable secondary offering and raise the required cash.There are other possibilities around but ITC must be aware that it has positive EBITDA and could be a target itself of bigger technology companies.Most junior technology companies with similar revenues have negative adjusted EBITDA and are of less interest.http://intrinsictechnology.com/  ;