PhoneX Holdings, Inc. (PXHI) research, news, and more from GeoInvesting

Company description

Fri, 17 May 2019 15:35:44 GMT

Phonex Holdings Inc., formerly uSell.com, Inc. (uSell), is a technology-based company. The Company focuses on extracting the value from used mobile devices. It acquires products from both individual consumers, on its Website, uSell.com, and from carriers, retailers and manufacturers through its subsidiary, We Sell Cellular, LLC. These devices are then distributed across the world, which leverages an online marketplace where professional buyers of used smartphones compete to buy inventory in an on-demand fashion. The Company, through uSell.com, allows individual consumers to find cash offers for their items based on the make, model, and condition of each item. Upon accepting an offer, consumers can ship their devices for free using either a prepaid shipping kit or shipping label, and then track the progress of their orders online from initiation to final payment of their devices.

Research

Thu, 25 Sep 2025 15:04:06 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($2.44; $82.7M market cap) provided an update on its special dividend.

“The company previously announced that its Board of Directors had approved a special cash dividend of $1.15 per share payable to holders of record as of September 22, 2025 with an ex-dividend date of September 23, 2025. On September 24, 2025, the Company was made aware through the OTC Markets website that FINRA set the ex-dividend date as October 2, 2025.”

Our Quick Take:

It is common for a stock to fall the amount of the special dividend on the ex-date, but we were a bit perplexed that PXHI did not fall at all on the 23rd. We are very curious on how this is going to play out. However, investors should note that it is possible the stock does not fall the full amount or at all based on strong remaining cash balance and business transformation into a recurring revenue model. We may have more on the PXHI enigma on our next Open Forum Event, in early October, which we will be adding to our calendar soon.

PhoneX Holdings, Inc. is a technology company powering the global wholesale trade of pre-owned mobile devices. Its industry-leading SaaS platform helps carriers, manufacturers, and distributors manage inventory, optimize sales, and grow their customer networks.

Research

Mon, 18 Aug 2025 15:12:58 GMT

PhoneX Holdings, Inc. (OTC:PXHI]) ($1.75; $62.6M market cap) reported Q2 2025 results on a 10-Q filing:

Q2 2025 sales of $2.4 million vs $0.8 million in the prior year
Q2 2025 GAAP EPS: $0.74 vs $0.02 in the prior year
Q2 2025 Non-GAAP EPS of $0.03 vs a loss of $0.02
We included interest income in the non-GAAP calculation due to the large cash balance the company is sitting on from the recent asset sale. The company has $50.5 million of cash or $1.39 per share on the balance sheet.

“In light of our goal to transform into a scalable technology company generating high-margin, recurring revenues, we will continue to focus on growing licensing revenue related to our Platform Partnership business while investing in long-term growth. The Company will invest in technologies that enhance multi-tenancy, internationalization, high-availability, and scalability. All of our initiatives are geared toward increasing the long-term value of our enterprise.”

Our Quick Take:

This story continues to get more compelling as the company is basically trading near cash per share with a growing recurring revenue high margin business, which it can finally solely focus on, now that it has sold the majority of its asset heavy business. Stay tuned for more updates.

PhoneX Holdings, Inc. acts as a market maker for used smartphones, sourcing devices from consumers, carriers, and retailers, and reselling them to wholesalers, retailers, refurbishers, insurers, and consumers.

Research

Fri, 11 Apr 2025 14:00:49 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($1.25; $49.3M market cap), announced that the sale of 79.5% of We Sell Cellular has closed on April 1, 2025 and that the buyer (ITOCHU Corporation) has option to acquire the remaining 20.5% on or before April 1 2028.

Recall the transaction was first mentioned in February 2025, which we covered here.

As we said then, we are very intrigued to monitor the shift to the high recurring revenue SaaS model which is discussed in today’s release:

“Following the sale, PhoneX Holdings will concentrate on accelerating the growth of its cloud-based SaaS platform, including PhoneX Connect—an enterprise solution that enables carriers, manufacturers, and large suppliers to sell devices to a global network of professional buyers.”

Here is a quote from CEO Nick Raman:

"This transaction represents a pivotal moment for the company," said Nik Raman, CEO of PhoneX Holdings. "We're proud of what we've built at We Sell Cellular, but this is the right time to shift our focus to scaling our software platform and driving product innovation."

Phonex Holdings Inc., formerly uSell.com, Inc. (uSell), is a technology-based company. The Company focuses on extracting the value from used mobile devices.

Research

Tue, 01 Apr 2025 15:03:06 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($1.38; $49.3M market cap), announced Q4 2024 results:

Q4 sales of $38.5 million vs $47.0 million in the prior year
Q4 EPS of $0.03 vs $0.09 in the prior year
Full year sales of $167.3 million vs $179.4 million in the prior year
Full year EPS of $0.10 vs $0.18

Overall, 2024 was a challenging year for the industry, and the Company experienced a reduction in both revenue and margins. Management had originally hoped that the iPhone 16 launch and excitement around AI capabilities would spur a significant trade in cycle did not come to fruition. Instead, the Company experienced only a modest lift in revenue and profits in Q4. Despite these results, we believe that the investments that we made in technology and operational efficiency have positioned us favorably versus our competitors, and that our performance significantly exceeded that of comparable participants in the industry. This differentiation enabled us to enter into discussions with and execute a definitive agreement with a strategic third-party buyer to sell 79.5% of the We Sell Cellular LLC business for $47.7M. Management believes that when completed this deal will not only provide significant value to shareholders, but will also enable We Sell Cellular to scale while we focus on our Platform Partnership business through PhoneX inc. We will continue to act as a strategic partner to We Sell Cellular, in which we will continue to retain a 20.5% stake. As part of the deal, PhoneX will receive certain distributions based on We Sell Cellular’s operating performance. The buyer has the option to purchase our remaining interest in We Sell Cellular LLC for $12.3 million at any time prior to April 1, 2028.

In addition to the divestiture of the majority of our stake in We Sell Cellular, LLC, the Company continued to generate meaningful software revenue via licensing agreements effected through its PhoneX, Inc. subsidiary. We are optimistic about our efforts to diversify and grow our licensing revenue streams, as we launched several programs with new large clients in 2024, and plan to expand these programs in 2025. In addition, the Company’s PhoneX Connect product, which enables smaller resellers to connect to and pre-sell inventory of larger suppliers, has proven highly effective. PhoneX Connect enables larger suppliers, like We Sell Cellular, to expand distribution while enabling smaller resellers to grow without substantial investment in inventory. During 2025 we intend to scale PhoneX Connect with our large customers, while adding additional suppliers to the network. Given our goal of transforming into a scalable technology company generating high margin, recurring revenues, we will continue to focus on growing licensing revenue related to our Platform Partnership business while investing in long-term growth. The Company will invest in technologies that enhance multi-tenancy, internationalization, high-availability, and scalability.

We are very intrigued to monitor the shift to the high recurring revenue SaaS model that the company is transitioning to.

Research

Thu, 13 Feb 2025 17:48:45 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($1.10; $39.3M market cap) announced it has entered into a definitive agreement to sell 79.5% of its subsidiary, We Sell Cellular for $47.7 million.

The company operates two models:

We Sell Cellular -a business that buys and sells used phones in bulk—a capital-intensive model requiring the company to purchase, inventory, and resell phones.
A Platform Partnership Model - A SaaS business model where the company sells software to wholesalers for buying and selling phones.

The transaction price values the We Sell Cellular subsidiary at around $60 million. It is unclear to us who the buyers are, or what PXHI will do with the remaining 20.5%. It is also unclear what the SaaS business numbers look like. PXHI did not break out the revenues and since their profitability did not meaningfully improve in the past few quarters, it is likely that the SaaS business might be just a small part of the overall financials. However, they will now need to show the numbers which could eventually translate to further upside if they are actually able to be profitable just with the remaining 20% from the We Sell and the SaaS business.

Moreover, they are selling the capital-intensive business and might be interested in investing the proceeds into the SaaS business, transforming the company from low-margin, volatile profitability, into a stable software model.

You can see our original article from July 2021 on how we felt the company was nearing an inflection point, positing that it could be an acquisition target:

“I believe the stock might eventually get acquired by a larger firm. When I began researching the idea in 2019, I noticed an interesting detail buried in a 2018 SEC 8K filing (page 36) related to a licensing agreement it signed with its first licensing partner, Brightstar. As part of the November 2018 agreement, Brightstar has an option to buy the whole company. The full terms of the option were not disclosed. However, some of the verbiage in the license agreement suggests that recent moves by the company could be pointing to a buyout.”

While this is not a full buyout, the acquirer will have a controlling interest and could likely purchase the remaining shares in due time. The buyer has a call option to do so, which expires on March 31, 2028.

Key highlights:

We are curious if the buyer is Brightstar, a large customer that had an option to buy the company, as highlighted in our original article.
Although WeSell generates the majority of the revenue, it is a low-margin, capital-intensive business.
For the last several quarters, we have highlighted the company’s gaining momentum in its SaaS business.
We assume the company may have sold the stake in WeSell to go all-in on the platform business.
Although the company will report lower revenues without WeSell, we believe it will be more profitable because the platform business likely has higher margins.

We will continue digging into this development and the new business metrics post-sale.

Phonex Holdings Inc., formerly uSell.com, Inc. (uSell), operates a used cell phone trading business, using its own wholesale approach as well as licensing a software trading platform

Research

Thu, 23 May 2024 13:54:43 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($1.35; $48.5M market cap), announced Q1 2024 results: (filed May 15, 2024)

Q1 sales of $43.6 million vs $50.6 million in the prior year
Q1 EPS of $0.03 vs $0.06 in the prior year

“While trade in volumes for the iPhone 15 were higher than for the iPhone 14 a year earlier, the Company experienced lower margins in its Proprietary Trading business in Q1 2024 versus Q1 2023. We believe that certain macroeconomic factors, such as the reopening of China after COVID-19 lockdowns, and increased demand for preowned iPhones in Russia following Apple’s departure from the region, resulted in significant competition for supply over the last four quarters, which negatively impacted margins. However, early signs in Q2 2024 point to a reversal of this trend, with margins trending higher in Q2 2024 than in Q2 2023. Based on these early signals, management believes that the market is beginning to normalize. Additionally, we believe that the reduced margin environment over the last four quarters may have caused more thinly capitalized competitors to exit the industry. While we cannot be certain that these positive margin trends will continue, we believe that our investments in technology and operational efficiency have positioned us favorably versus our competitors.”

The company has repurchased 407,336 shares since the beginning of the year.

Research

Wed, 03 Apr 2024 15:26:57 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($1.35; $48.5M market cap), announced Q4 2023 results:

Q4 sales of $47.0 million vs $47.4 million in the prior year
Q4 EPS of $0.09 vs $0.09 in the prior year
Full year sales of $179.4 million vs $149.2 million in the prior year
Full year EPS of $0.17 vs $0.21

“The Company’s Proprietary Trading business experienced lower margins in 2023, as trade-in volumes were lower than during the same period in 2022. Management believes that this reduction was due to a muted launch of Apple’s iPhone 14 series. Due to a reduction in available supply compared to prior years and an inflow of new entrants into the market over the last few years, it was more challenging to procure supply at attractive margins, and device margins on sales reduced sharply. While preliminary data from the iPhone 15 launch indicate higher trade in volumes than the iPhone 14, the Company continues to experience lower margins in its Proprietary Trading business, likely due to heightened competition”.

Research

Wed, 15 Nov 2023 16:25:41 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($1.00; $36.1M market cap), an online platform for the wholesale exchange of used smartphones, announced Q3 2023 results: (via 10-Q only)

Q3 sales of $41.9 million vs $37.5 million in the prior year
Q3 EPS of $0.01 vs $0.04 in the prior year

“The Company’s Proprietary Trading business continued to experience lower margins in Q3, as trade-in volumes remained lower than during the same period in 2022. Management believes that this reduction was due to a relatively unsuccessful launch of Apple’s iPhone 14 series. Due to a reduction in available supply compared to prior years and an inflow of new entrants into the market over the last few years, it was more challenging to procure supply at attractive margins, and device margins on purchases reduced sharply. It is still too early to assess the impact of trade-in volume following the iPhone 15 launch.”

PXHI buys/brokers used phones. So if the launches don't go well, people do not trade in their phones. This means:

Less inventory to sell.
Less supply, so prices to get inventory goes up, leading to reduced gross margins.

This is a risk that killed the company in the past, and one that we talked about in our original report. However, with a better balance sheet, they are in a position to hang in there until the environment improves.

Research

Tue, 15 Aug 2023 18:50:45 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($1.88; $67.9M market cap), an online platform for the wholesale exchange of used smartphones, announced Q2 2023 results: (via 10-Q only)

Q2 sales of $39.9 million vs $31.9 million in the prior year
Q2 EPS of $0.01 vs $0.02 in the prior year

“The Company’s Proprietary Trading business contracted in Q2, as trade-in volumes dropped sharply from the prior quarter. Management believes that this reduction was due to a relatively unsuccessful launch of Apple’s iPhone 14 series. Due to a reduction in available supply versus prior years, it was more challenging to procure supply at attractive margins, and device margins on purchases reduced sharply. While these conditions have improved to some extent in recent weeks, the market is still substantially less constructive than it was during the same period last year. In order to continue to expand the Company's market share, and despite the lower margin environment, management will continue to seek strategies to expand the Company’s reach and capture incremental market share through its Proprietary Trading business. We believe that we can leverage our scale and technological advantages to drive efficiencies and gain an advantage over less efficient, more thinly capitalized competitors. In particular, the Company has begun building out a remanufacturing operation that it believes will result in long-term market share expansion and margin growth, and has embarked on a lean transformation of its distribution center to reduce its costs. In order to drive these initiatives, the Company will make investments in personnel and infrastructure during the upcoming quarters. The success of We Sell Cellular’s growth strategy depends on its ability to execute and its ability to continue to scale its volumes despite uncertain market conditions.”

Research

Tue, 16 May 2023 14:44:27 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($1.60; $57.9M market cap), an online platform for the wholesale exchange of used smartphones, announced Q1 2023 results: (via 10-Q only)

Q1 sales of $50.6 million vs $32.2 million in the prior year
Q1 EPS of $0.06 fully taxed vs $0.06 in the prior year untaxed

The company repurchased 533,702 from shareholders at an average price of $1.15 this quarter. The company is beginning to see a sharp slowdown in Q2, so will need to see what that means on a sequential and year over year basis.

“While We Sell Cellular’s results in the Q4 2022 and Q1 2023 were exceptional, we expect a sharp slowdown in its business in the second quarter. Management attributes this slowdown to an industry-wide reduction in trade-in volume and a weaker overall economy.”

It should be noted that the company also mentioned that it was seeing a slowdown in the annual report heading into Q1, but the company posted very strong results. However, Q1 inventory has come down by about $2.0 million from Q4 levels.

Research

Fri, 31 Mar 2023 19:58:51 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($1.10; $39.8M market cap), an online platform for the wholesale exchange of used smartphones, announced Q4 and full year 2022 results:

Full year sales of $149.2 million vs $105.5 million in the prior year
Full year EPS of $0.20 vs $0.14 in the prior year (should be noted that the company paid full tax in 2022 vs. tax benefit of $0.02 in the prior year).
Q4 sales of $47.4 million vs $26.1 million in the prior year
Q4 EPS of $0.12 vs $0.02 in the prior year

“Management will focus on growing Software Licensing Revenue related to its Platform Partnership business while investing in long-term growth, with the goal of transforming into a scalable cloud-based software company generating high-margin, recurring revenues. The Company has completed a redesign of its software, with a particular focus on scalability, internationalization, and multi-tenancy. Management believes that this investment will substantially expand its total addressable market, as it can now license its SaaS product to distributors of all sizes throughout the world. In addition to this, the Company recently launched PhoneX Connect, a service that enables smaller resellers to connect to and presell inventory of larger suppliers. PhoneX Connect enables larger suppliers, like We Sell Cellular, to expand distribution while enabling smaller resellers to grow without a substantial investment in inventory. We believe that there is significant overlap between We Sell Cellular’s customer base and the customers that will benefit from the PhoneX Connect software offering, and we plan to leverage this opportunity. While We Sell Cellular will serve as the initial supplier of the PhoneX Connect network, we may seek to add additional suppliers to the network over time.”

Share buybacks:

“Despite increasing its level of investment in technology, the Company has been able to generate substantial excess cash, which enabled us to repurchase a meaningful number of shares through both private and open market transactions. In 2022, the Company repurchased roughly 6.5M shares. Management will continue to seek productive uses of its capital, including investments in fast turning inventory, long term investments in technology projects with high expected ROI, and stock repurchases at favorable prices.”

Research

Tue, 08 Nov 2022 14:57:28 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($0.89; $33.7M market cap), an online platform for the wholesale exchange of used smartphones, announced Q3 2022 results:

Sales of $37.5 million vs $27.0 million in the prior year
GAAP EPS of $0.04 vs $0.03 in the prior year
Non-GAAP EPS of $0.04 vs $0.02 in the prior year (tax adjusted as the company paid zero taxes in the last year quarter)
Important Takeaways:
- The company has bought back 6.7 million shares over the last 12 months, including 2 million shares in a private transaction during this quarter at an average price of $1.10
- Management commentary is getting more confident and decisive about its growth prospects.
- Valuation suggests that the stock is materially undervalued
  - P/E = 9.0
  - P/S = 0.26
  - EV/S = 0.22
- Caveats:
  - Low gross margins are likely restricting an expansion in valuation multiples.
  - Need to assess what a tight iPhone supply would mean for near-term growth prospects

“Management continues to seek strategies to expand the Company’s reach and capture more market share through its Proprietary Trading business, as it believes that the returns on capital for the business are highly attractive. In particular, the Company plans to build out a remanufacturing operation that it believes will result in long term market share expansion and margin growth. In order to achieve this goal, the Company will make investments in personnel and infrastructure during the upcoming quarters. The success of We Sell Cellular’s growth strategy, however, depends on its ability to continue to procure higher volumes of devices at favorable prices…

…In addition, the Company generated meaningful software revenue during the third quarter of2022 via a licensing agreement effected through its PhoneX, Inc. subsidiary. Management will focus on growing Software Licensing Revenue related to its Platform Partnership business while investing in long-term growth, with the goal of transforming into a scalable cloud-based software company generating high-margin, recurring revenues. The Company has completed a redesign of its software, with a particular focus on scalability, internationalization, and multi-tenancy. Management believes that this investment will substantially expand its total addressable market, as it can now license its SaaS product to distributors of all sizes throughout the world. We believe that there is significant overlap between We Sell Cellular’s customer base and the customers that will benefit from PhoneX’s software offering, and we plan to leverage this opportunity.”

Debt and buybacks

“Despite increasing its level of investment in technology, the Company has been able to generate substantial excess cash, which enabled us to extinguish our long-term debt obligations and repurchase a meaningful number of shares through both private and open market transactions. During the twelve months prior to this filing, the Company repurchased roughly 6.7M shares. Management will continue to seek productive uses of its capital, including investments in fast turning inventory, long term investments in technology projects with high expected ROI, and stock repurchases at favorable prices.”

Research

Fri, 01 Apr 2022 15:22:41 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($0.87; $25.9M market cap), an online platform for the wholesale exchange of used smartphones, announced Q4 2021 results:

Q4 Sales of $26.1 million vs $18.2 million in the prior year
Q4 EPS of $0.02 vs $0.01 in the prior year
Full year sales of $105.5 million vs $75.0 million in the prior year
Full year EPS of $0.14 vs $0.04 in the prior year

"The Company’s Proprietary Trading business grew meaningfully in 2021, as trade-in volumes remained high throughout most of the year. Management attributes this growth to wireless carriers aggressively leveraging trade in as a marketing tool to drive new subscribers. If carriers continue to promote trade in aggressively, our Proprietary Trading business will benefit. While early signs in 2022 indicate continued volume growth, we cannot be certain that this trend will sustain. In an effort to augment its growth strategy, We Sell Cellular LLC began offering 30-day credit terms to qualified buyers during the third quarter of 2021. All terms are substantially insured by a third party. Management will continue to seek strategies like this to expand the Company’s reach and capture more market share through its Proprietary Trading business, as it believes that the returns on capital for the business are highly attractive. The success of its growth strategy, however, depends on We Sell Cellular LLC’s ability to continue procure higher volumes of devices at favorable prices.

In addition, the Company generated meaningful software revenue in 2021 via a licensing agreement effected through its PhoneX, Inc. subsidiary. Management will focus on growing Software Licensing Revenue related to its Platform Partnership business while investing in long-term growth, with the goal of transforming into a scalable cloud-based software company generating high-margin, recurring revenues.

Despite increasing its level of investment in technology, the Company was able to generate substantial excess cash, which enabled it to extinguish its long-term debt obligations and repurchase a meaningful number of shares through both private and open market transactions. Through the end of 2021 and early 2022, the Company repurchased roughly 4.4M shares. Management will continue to seek productive uses of its capital, including investments in fast turning inventory, long term investments in technology projects with high expected ROI, and stock repurchases at favorable prices."

Research

Tue, 16 Nov 2021 18:02:02 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($0.99; $43.3M market cap), an online platform for the wholesale exchange of used smartphones, announced Q3 2021 results:

Sales of $27.0 million vs $22.6 million in the prior year
EPS of $0.03 vs $0.01 in the prior year

We are very encouraged that the company seems to be materially expanding its software side of the business, which as we pointed out in our recent report is the area of the business we are most excited about.

Details on quarter and outlook from 10-Q:

“The Company’s Proprietary Trading unit continued to execute on its measured growth strategy, as trade-in volumes remained strong throughout the summer months. In an effort to augment demand for its products, We Sell Cellular LLC began offering 30- day credit terms to qualified buyers during the third quarter of 2021. All terms are substantially insured by a third party. Management believes that, given the capital constrained nature of its customer base, this offering will enable it to expand its customer base and gain a greater market share. Since launching the program in July, we have seen early traction and a positive response from customers. The success of the strategy, however, depends on We Sell Cellular LLC’s ability to continue to procure a higher volume of devices at favorable prices.

In addition, the Company continued to generate meaningful software revenue via a licensing agreement effected through its PhoneX, Inc. subsidiary. Management will focus on growing Software Licensing Revenue related to its Platform Partnership business while investing in long-term growth, with the goal of transforming into a scalable cloud-based software company generating high-margin, recurring revenues. The Company has completed a redesign of its software, with a special focus on scalability, internationalization, and multi-tenancy. Management believes that this investment will substantially expand its total addressable market, as it can now license its SaaS product to distributors of all sizes throughout the world. We believe that there is significant overlap between We Sell Cellular’s customer base and the customers that will benefit from PhoneX’s software offering, and we plan to leverage this synergy.

In line with the aforementioned strategy, PhoneX, Inc. has significantly expanded both its onshore and offshore technology team throughout the course of the 2021. The Company plans to continue to invest in technologies that enhance multi-tenancy, internationalization, high-availability, and scalability. We have begun to pursue research and development in the field of machine learning in an effort to develop algorithms to assist our customers in making intelligent pricing decisions. All of our initiatives are geared toward increasing the long-term value of the enterprise. Management anticipates an increase in its cost structure in the short and medium term; however, we will seek to maintain operating leverage by contracting functions where management deems appropriate. The success of any of the above endeavors hinges on the Company’s ability to successfully market and distribute its cloud-based software offering. Early signs indicate a positive reception by the market.”

Research

Wed, 14 Jul 2021 18:26:13 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($1.09; $32.3M market cap, an online platform for the wholesale exchange of used smartphones and Run to One model portfolio selection surpassed the $1 mark in yesterday’s trading session.

Shares rose 20% to hit a new high of $1.10. We added the stock to the portfolio at $0.30 in May 2019.

Just a few weeks ago when the stock was trading at $0.50, we highlighted several bullish events that occurred, including a share repurchase program and prepayment of credit facility.

In addition, we released several PodClips discussing its recent events, deeper dive into what the company does and one discussing its operating leverage. You can find audio of each PodClip here.

You can also read a synopsis of why we think PXHI is on the cusp of increasing in value over the next year:

PXHI: A Trifecta of Inflection Points Converge

PodClips

Sun, 27 Jun 2021 22:52:18 GMT

PodClip - Case Study on Operating Leverage

PodClips

Thu, 24 Jun 2021 13:10:03 GMT

PodClip - More color on what PhoneX does....

PodClips

Tue, 22 Jun 2021 19:33:00 GMT

Podclip

Hello there it's Jan again analyst of Maj Soueidan. Today I would like to focus on Phonex Holdings, PXHI. This is another stock we have covered at Geo for a while now.

However, recently, we saw significant developments, which we believe might lead to potential upside and make the stock another preferred perfect candidate for a run to $1 per share.

The reason for all this is the press release which was put out by the company yesterday, the PR talks about a share repurchase program and several other positive steps. They're cleaning up their capital structure as they're getting rid of their debt and convertible notes.

Moreover, the company expects most holders will convert into equity. This could mean that they're trying to sell the company - they even closed their credit line, which either means they're super bullish about the future or they know the acquirer will have its own credit facility.

We believe in the acquisition prospects, especially due to the possible existence of the buyout option by BrightStar, which we highlighted in our original management interview notes in 2019, which you can find on our portal. The stock inked a licensing deal with BrightStar in November 2018. As part of the agreement BrightStar has an option to buy the whole company. The full terms of the option were not disclosed. However, some of the verbiage in the license agreement suggests that recent moves by the company could be pointing out to that specific buyout.

The most interesting part of the original agreement talks about the stock not having any third-party debt or securities interests such as convertible notes in order to go through the buyout option. The press release we highlight shows that both of the conditions, third party debt and the convertible notes, now seem to be satisfied by removing any such debt and the notes. At the very least management's actions continue to portray confidence in the business.

For example, about $1.2 million in convertible notes are owned by insiders who have elected to convert their notes into equity. Given all this, we will be closely scrutinizing the developments. The stock is up moderately today.

Research

Tue, 22 Jun 2021 17:13:37 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($0.50; $27.9M market cap, an online platform for the wholesale exchange of used smartphones, announced a stock repurchase program, authorizing the company to repurchase up to $1 million of stock.

Other recent events:

The Company recently repurchased 178,269 shares of its common stock from an unaffiliated investor for a purchase price of $89,134.50 or $0.50 per share.
On June 7, 2021, the Company notified Siena Lending Group LLC of its intent to prepay the amounts outstanding and to terminate its revolving credit facility under the Loan and Security Agreement dated November 20, 2018. The Company expects to pay the balance due at that time plus interest, fees and an early payment/termination premium. (The credit facility line was for up to $6 million, as of last quarter the company owed $900,000)
The Company has notified the holders of $4,805,000 of convertible notes that it intends to prepay the notes, subject to prior conversion. The Company expects that most, if not all Note Holders will convert.

In our opinion it seems like PXHI could be cleaning up the capital structure, possibly opening the door for it to be acquired.

We believe this to be the case, especially due to the possible existence of the buyout option by Brightstar we highlighted in our original management interview notes in 2019. PXHI inked a licensing deal with Brightstar in November 2018 and as part of the agreement, Brightstar has an option to buy the whole company. The full terms of the option were not disclosed. However, some of the verbiage in the license agreement suggests that recent moves by the company could be pointing to a buyout. The most interesting part of the original agreement can be seen below.

...“Option Price” means (w) the Base Price, assuming there is no (i) third-party or intercompany debt and liabilities related to the pre-closing period (other than mutually agreed upon ordinary course payables and assumed liabilities), or (ii) encumbrance, lien or security interest of any kind on any asset that would be transferred to Brightstar pursuant to the Option Purchase Agreement...

As you can see, the option to acquire PXHI depends on first, the company not having any debt that would not be agreed upon and second, not having any security interest (such as convertible notes). The press release we highlight shows that both of the conditions now seem to be satisfied by removing any debt and the convertible notes.

At the very least, management’s actions continue to portray confidence in the business. For example, $1.2M of the convertible notes are owned by insiders who have elected to convert their notes into equity. The move to terminate the company's $6 million line of credit is also a very bullish indicator that management is seeing improved business conditions.

For more information, please see our initial research note which was released after we interviewed PXHI management.

Research

Thu, 01 Apr 2021 17:32:53 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($0.43; $12.7M market cap, an online platform for the wholesale exchange of used smartphones announced Q4 2020 results:

Q4 Sales of $18.2 million vs $17.3 million in the prior year
Q4 Non-GAAP EPS of $0.00 vs $0.00 in the prior year
Full year sales of $75.0 million vs $67.9 million in the prior year
Full year Non-GAAP EPS of $0.04 vs $0.04 in the prior year

"Despite a roughly six-week government mandated shut down due to COVID-19 between the end of March and the beginning of May, the Company had a positive year, driven by high demand for used mobile devices across the world.

The Company’s success in the wake of the COVID-19 pandemic provides continued evidence that its substantially lower cost structure, its strategy to purchase more opportunistically, and increased activity on its online platform have fundamentally transformed the business for the better. Management will continue to focus on scaling transaction volume related to its Platform Partnership business while purchasing opportunistically through its We Sell Cellular LLC subsidiary. Management believes that a continued focus on enhancing its software will result in value creation for both the Proprietary Trading and Platform Partnership sides of the business. "

Research

Fri, 27 Nov 2020 05:00:00 GMT

On November 17, 2020, we included PhoneX Holdings’ (OTC:PXHI) ($0.34, $9.7M market cap) strong Q3 2020 results in our morning email. PhoneX runs an online platform for the wholesale exchange of used smartphones. They reported:

Sales of $22.6 million vs $15.4 million in the prior year
EPS of $0.01 vs a loss of $0.01

While it is unclear if the recent trend in strong sales can continue, it's possible that COVID-19 has increased the popularity and usage of the company's on-line platform. To get caught up on this VERY illiquid and speculative RunToOne Model Portfolio selection, please read our management interview cliff notes and important risks factors here. The big issue facing the company is consistency, as the company has experienced quarterly volatility in sales and earnings.

	Q3 2020	Q2 2020	Q1 2020	Q4 2019	Q3 2019	Q2 2019	Q1 2019
Rev	$22.6	$14.5	$19.7	$11.1	$15.4	$17.8	$17.2
EPS	$0.01	$0.00	$0.03	$0.00	($0.01)	$0.04	$0.01

Regardless, with a P/E of only 6.8, we are definitely interested in following the company more closely to determine if growth catalysts may be approaching.

From the 10-Q filed on OTC markets, we learned that:

Since announcing its $50,000 stock repurchase program in May 2019, the company has surpassed that amount by buying 1.3 million shares at various prices for a total of $143,000, with the most recent purchase occurring at $0.12 on July 31, 2020.
Iphone 12’s role in PXHI’s near term outlook:

“In the third quarter, management continued to see a favorable pricing environment due to strong global demand coupled with its strong supply relationships. Management cannot predict how the pricing and supply environment will develop through the rest of the year, as this will depend heavily on the success of the iPhone 12 launch and associated trade in promotions offered by Apple, retailers, and wireless carriers. A successful launch will drive substantial volume to the market but will also result in a steep drop in pricing. The Company’s ability to earn profits will depend on its ability to navigate this environment.”

While We don't have clear indications of the success of the iPhone 12 launch, Apple Inc. (NASDAQ:AAPL) is quite optimistic based on the data it currently has:

"According to Cook, initial data points on iPhone 12 sales are "really quite good." During the earnings call, Cook went on to say that the iPhone 12 lineup is the strongest lineup that Apple has hard by far. 5G also represents a once in a decade opportunity due to the excitement around 5G technologies. "We're off to a great start," said Cook."

Lower cost structure helping the company navigate during the covid pandemic

“The Company’s success in the wake of the COVID-19 pandemic provides continued evidence that its substantially lower cost structure, its strategy to purchase more opportunistically, and increased activity on its online platform have fundamentally transformed the business for the better. Management will continue to focus on scaling transaction volume related to its Platform Partnership business while purchasing opportunistically through its We Sell Cellular LLC subsidiary. Management believes that a continued focus on enhancing its software will result in value creation for both the Proprietary Trading and Platform Partnership sides of the business.”

Caveats:

The company cautions that a second COVID-19 wave could negatively impact its business. While the company has previously stated that COVID-19 poses demand and supply side risks, we believe the main risk is likely related to potential supply chain issues and not weaker demand driven factors. Comments on COVID-19 from Q2 2020:

“Since the inception of the COVID-19 pandemic, the industry has seen a drop in available supply which has put substantial upward pressure on pricing. If the Company is able to continue to secure inventory, this pricing dynamic could be favorable, but if the Company is unable to continue to procure adequate supply, this dynamic could be negative for future results. Furthermore, with the continued business shutdowns and the resulting downturn of the worldwide economy and terminations and lay-offs resulting therefrom, the Company may experience reductions in the demand for its products and services. Management is unable to predict the continuing supply and demand dynamics resulting from the COVID-19 pandemic or the long-term implications for the Company’s operations and financial condition.”

Research

Tue, 17 Nov 2020 19:20:32 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($0.14; $4.1M market cap, an online platform for the wholesale exchange of used smartphones announced Q3 2020 results:

Sales of $22.6 million vs $15.4 million in the prior year
EPS of $0.01 vs a loss of $0.01

Research

Mon, 18 May 2020 04:00:00 GMT

Q1 2020 ResultsSales of $19.7 million vs $17.2 million in the prior year

EPS of $0.03 vs $0.01

The Company’s results for the first quarter of 2020 provide continued evidence that its substantially lower cost structure, its strategy
to purchase more opportunistically, and increased activity on its online platform have fundamentally transformed the business for
the better. Management will continue to focus on scaling transaction volume related to its Platform Partnership business while
purchasing opportunistically through its We Sell Cellular LLC subsidiary. Management believes that a continued focus on enhancing
its software will result in value creation for both the Proprietary Trading and Platform Partnership sides of the business.

On Sunday, March 22, 2020, the Company was ordered to shut its warehouse due to the COVID-19 pandemic in compliance with
an Executive Oder issued by the Governor of New York where its warehouse is located. The Company subsequently received
communication from a major wireless carrier that its Long Island, New York business was providing “essential critical services” to
enable the carrier to maintain critical telecommunications infrastructure during the COVID-19 pandemic. Given guidance provided
by the State of New York stating that businesses providing support to essential businesses are exempt from the Governor’s
Executive Order on workforce reduction, the Company decided that it could reopen its warehouse, provided that it put in place new,
far more stringent safety protocols. Accordingly, the Company began the process of rehiring warehouse employees in late April
2020. In early May, the Company received the proceeds of the loan provided by the federal government’s Paycheck Protection
Program to mitigate the adverse impact of its shutdown. This loan will be reflected on the Company’s balance sheet for Q2.
Management expects for a substantial part of this loan to be forgivable, as it will be used to pay for covered payroll related expenses,
rent, and utilities. Because of the uncertainties posted by the COVID-19 pandemic, we expect our results of operations to decline,
maybe even materially, in the current quarter.

Since the inception of the COVID-19 pandemic, Management has seen a dramatic drop in available supply which has put substantial
upward pressure on pricing. If the Company is able to continue to secure inventory, this pricing dynamic could be favorable, but if
the Company is unable to continue to procure adequate supply, this dynamic could be negative for future results. Management is
unable to predict the continuing supply and demand dynamics resulting from the COVID-19 pandemic.

Research

Mon, 19 Aug 2019 04:00:00 GMT

PhoneX Holdings, Inc. (OTC:PXHI), an online platform for the wholesale exchange of used smartphones, announced Q2 2019 results:

$17.8 million vs $19.2 million in the prior year
EPS of $0.04 vs loss of $0.03 in the prior year
Adjusted EPS (Need more information to gain more of an understanding on how to treat $1,000,000 of Brightstar revenue that was generated in the quarter.)

The Company posted strong results for the second quarter of 2019, offering continued evidence that its substantially lower cost structure, its strategy to purchase more opportunistically, and increased activity on its online platform have fundamentally transformed the business for the better. Results were also positively impacted by the recognition of approximately $1,000,000 in revenue from Brightstar, which had previously been booked as deferred revenue. This revenue was earned in the second quarter, as the Company completed its integration obligations on schedule.

On May 4, 2019, the Company completed the sale of its uSell.com website, brand, and related assets for $325,000. This sum was also recognized on the Company’s income statement in Q2. Due to the sale of these assets and the Company’s focus on scaling its PhoneX Inc. Platform, the Company changed its name to PhoneX Holdings Inc.

Management is now focused on scaling transaction volume related to its Brightstar relationship while continuing to purchase opportunistically through its We Sell Cellular LLC subsidiary. Management believes that a continued focus on enhancing its online platform will result in value creation for both the Proprietary Trading and Platform Partnership sides of the business.

Things of interest to us::

Did most of the $1 million revenue generated from Brightstar for the quarter pass through to net income with little associated cost, and will this be how the revenue flows in the future?
How much of the total revenue was generated from the Brightstar relationship (royalties from product sales vs. integration fees)?
Will integration fees be recurring?
Cash burn (cash declined for 2 straight quarters).

It is our understanding that most of the gross margins that the company generates from the Brightstar relationship results from commission earned from transactions that occur on PXHI's website. It is also our understanding that most of the revenue from the Brightstar relationship will not have any significant operating expenses related to it. So, it's a very asset light relationship (since the company is allowing Brightstar to basically advertise its inventory on the company's website, as opposed to in the past when the company had to purchase most of its inventory from various wholesalers).

This could mean that all the gross margin from that revenue could flow directly to the bottom line. A key to the attractiveness of this relationship is dependent on how consistent the revenue relationship can be vs. the revenue being Lumpy over quarters.

If you're interested in following this company, check out its filings for the quarter at otcmarkets.com. It contains good information on the new direction the company is moving.

Interviews

Wed, 29 May 2019 13:43:04 GMT

On May 17, 2019 we highlighted the PhoneX’s strong Q1 2019 results that have propelled shares to new highs.

Yesterday, we mentioned that we established a small long position in PXHI and added the stock to our Run to One Model Portfolio. We also mentioned that the Company announced a stock repurchase program for up to $50,000 of its common stock.

We had a chance to interview CEO Nikhil Raman late last week. Below is a bulleted summary of our call:

Nik started the Company over 10 years ago, wanting to enter the used smartphone market.
He wanted to build a marketplace for buying and selling used phones.
At first, the company was a platform for consumers to trade in phones. It was a direct to consumer platform, connecting sellers with buyers.
The company went public shortly after it was acquired by USell.com, a marketplace where consumers could buy and sell their used phones.
Nik quickly realized that Usell.com was not the right partner and began to make moves to dissolve the relationship.
PXHI Built a competing virtual platform for a mobile phone exchange in which they never had to touch the product. However, in 2014, major carriers entered the market and derailed that platform.
Eventually, he tweaked the business plan so that the supply of phones would be sourced from telecom companies, and acquired We Sell Cellular to further this objective. In this model, the company would take possession of phones, refurbish them to quality standards and maintain an inventory.
PXHI had to fuel growth by debt and private equity in its early days.
The company realized that holding inventory was not the best avenue because dealing with supply chain disruptions are challenging. So, Nik chose to add an additional source of revenue to the company by selling software licenses that powered the We Sell Cellular platform to other mobile exchange platform operators and telecom companies. The company felt that this type of asset light model would be the future of the company because it would hold no inventory and essentially become the middle man between the carrier and end customers.
PXHI Signed a contract to license its online platform technology to Brightstar, one of the largest service providers to the connected device industry.
Brightstar has an option to buy PXHI if certain milestones are met. (Terms not disclosed)
The official launch of the Brightstar relationship is about to begin; thus far, all revenue has come from its own platform - buying product from carriers and selling on its We Sell Cellular platform.
Brightstar will pay commission to PXHI for the use of the We Sell Cellular platform
Fully diluted share count is 47 million

Caveats:

Given management’s past difficulties executing on various business plans, a significant amount of risk remains in management's ability to successful implement its current plan. Even though management was able to grow its topline from $5 million in 2011 to over $100 million in 2017, the company was unable to achieve profitability. Q1 2019 marks the first profitable quarter for the company.

The stock is also very illiquid with a wide bid/ask spread.
It is unclear to us if management will make a full shift to the asset light (Bright Star) model or if it will continue to also carry inventory risk by purchasing phones to sell on its platform.
Gross margins are very thin with the asset heavy model side of the business, which is where most of their current revenue is being generated. However, we believe that the asset light model should carry higher gross margins.
Past troubles the Company has experienced were due to the unforeseen negative industry dynamics that can occur when dealing with major carriers. This can affect the supply and logistics chain. An example of this is from the company's Q1 in 2018:

“Beginning with Apple’s announcement of a dual iPhone launch in September (the iPhone 8 and X), the market experienced an atypical pricing pattern, followed by a softening of demand caused by disruptions in key global markets. Typically, after an iPhone launch, the industry experiences a significant decrease in pricing, after which a prolonged period of price stability is observed. During this cycle, we experienced a very different dynamic due to the fact that Apple’s initial launch of the iPhone 8 did not drive the expected amount of demand or trade-ins. The industry thus experienced an inventory shortage immediately after the launch of the iPhone 8, which led to relatively inflated prices through most of the fourth quarter.”

It is also unclear how the model of selling used and refurbished phones will be impacted by many carriers offering lease programs to lower the cost of new phones. We need to further analyze PXHI’s price model strategy.
Without the terms of the Brightstar relationship having been disclosed, it is hard to know the profitability it could lead to.

Given the caveats, it's clear that the company has been able to generate substantial revenue, which is approaching an $80 million run rate. Thus, we are assuming the Brightstar relationship could be significant for the Company. One of the issues management talked about during our interview was the inability to have reliable access to a supply of phones, as well as being limited to the amount of inventory it could carry in its asset heavy model. The Brightstar relationship, when fully implemented, would alleviate both of these dynamics.

An interesting thing to note is that it seems the company has significant operating leverage, as evident in its Q1 2019 financials that showed revenues increased about 20%, while SG&A decreased. If the Brightstar relationship kicks in, there could be a significant contribution to earnings per share for PXHI.

Research

Tue, 28 May 2019 15:01:58 GMT

PhoneX Holdings, Inc. (OTC:PXHI), an online platform for the wholesale exchange of used smartphones. Management is making a last ditch effort to successfully execute its business plan. On May 17, 2019 we highlighted the Company’s strong Q1 2019 results that have propelled shares to new highs. Today, the Company announced a stock repurchase program to repurchase up to $50,000 of the Company’s common stock.

We established a small long position in PXHI and are adding the stock to our Run to One Portfolio. Significant amounts of risk remain in management's ability to execute its plan. The stock is also very illiquid with wide bid/ask spread.

Research

Fri, 17 May 2019 15:36:28 GMT

PhoneX Holdings, Inc. (OTC:PXHI) ($0.13; $3.6M market cap) is building the dominant online platform for the wholesale exchange of used smartphones. PhoneX Holdings acquires devices from major carriers, big box retailers, manufacturers, and distributors and then moves these devices throughout the world to those who need them most. The Company operates two distinct models:

a Proprietary Trading Model, through which it purchases devices utilizing its own balance sheet via its subsidiary We Sell Cellular LLC,
a Platform Partnership Model, through which it enables suppliers to integrate directly into its online platform via licensing agreements with its subsidiary PhoneX, Inc.

We are taking our initial look at the Company based on strong Q1 2019 results:

Sales of $17.7 million vs $14.1 million in the prior year
EPS of $0.01 vs a loss of $0.08 in the prior year

"Our results in the first quarter of 2019 validated the shifts in strategy that we made last year to scale down our Proprietary Trading business, purchase more opportunistically, reduce costs, and focus on our Platform Partnership business. The sale of uSell.com was in line with this strategy and will enable an even deeper focus on scaling our platform. We look forward to a successful launch with Brightstar in the near future."

We will attempt to interview management to learn more about this business shift and the potential growth prospects.