Originally Posted by
Baa_Baa
What is likely in renegotiation of existing contracts, assuming a pivot to transaction revenues or share of transactions converting to sales, is that essentially that PLX position to take on more risk in that their customers customers (end users) transactions will be sustained or preferably grow, and the tradeoff will be to accept lower recurring license revenue. It's a careful balancing act.
The other thing that will feature is that while the bulk of PLX transactions will be from McDonalds, but the contracts are country based, the risk to McD's is disparity of costs (revenues to PLX) across their global network. With McD's ownership of PLX and influence, it is possible if not probable that McD's corporate negotiates a global contract model that countries roll into when their current contracts expire. That global negotiating position is very strong on McD's side and while they are likely to want PLX to remain viable and successful, they won't be motivated to make PLX super successful at McD's expense.
Ultimately the future prosperity of PLX is reliant on bringing online more and more global / country scale customers, using a blended license & transactions contract model as the benchmark. I'd like to hear more about how the White Castle rollout and IKEA is going. PLX have a habit of going silent on great prospects, like Anheuser-Busch. We've heard nothing either about 7Eleven Fuel App launched in March 2016, although it is still an advertised product. The SuperIndo contract is exciting for the diversification into grocery retail and assuming that goes well, the massive potential of SuperIndo's 51% owner Ahold Delhaize.
Having held most since 2014, after taking a chunk of profit in 2016, now mostly fully loaded again. 30% of portfolio. I am impressed with how the Board and Management have moved this company to growth, modest profit, and decent cash reserves. It is much more secure as each year goes by and has a great future, imho.