New CFO sees interesting in-tray at 20 percent year-on-year growth database company:
Database vendor MariaDB has cut a number of jobs and reiterated a "going concern" warning over its medium-term financial viability.
In a statement to the stock market [PDF] late last month, the company, which floated on the New York Stock Exchange at the end of 2022, said it was reducing its headcount by 26 "to achieve cost reduction goals and to focus the Company on key initiatives and priorities."
In December, CEO Michael Howard told The Register the company was looking to hire more people following $104 million in funding and $18 million through private investment in public equity through the special purpose acquisition company that enabled the flotation.
Although the job losses may be a fraction of the reported 340 people the company employs, other details in the filing may highlight further cause for concern over its financial viability.
It includes a mention of MariaDB's February 10Q warning that the company's current cash and cash equivalents "would not be sufficient to fund our operations, including capital expenditure requirements for at least 12 months from... February 13, 2023, raising substantial doubt about our ability to continue as a going concern."
The March 24 statement said it anticipated that the money raised by database subscriptions and services would not be enough to meet its projected working capital and operating needs. "We are currently seeking additional capital to meet our projected working capital, operating, and debt repayment needs for periods after September 30, 2023 ... Going forward, we cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business," it says.
The timing of MariaDB's flotation may have been unfortunate. While it was already in train, the SPAC model was going out of favor. Research from early December 2022 by investment research firm Bedrock AI found 49 per cent of the quarterly financial filings by companies floating via a SPAC since the beginning of the year contained an admission of ineffective internal controls. Earlier this month Europe's biggest SPAC, Pegasus Europe, announced it would cease operations and return capital to its investors at the beginning of May. In May last year, Goldman Sachs took a break from handling SPAC-based IPOs.
Speaking to The Register, MariaDB CMO Franz Aman said the company was still hiring, but a number of job losses had also been necessary. "It's absolutely no secret that, like companies in tech, we need to be super prudent, and we need to be fiscal responsive. We also had a look at our headcount plan, and we had to make sure that we were doing the right things. We had a reduction in workforce... so have most other tech companies: everyone's concerned about profitability, cash position."
Aman argued that a "going concern" notice in regulatory filings was far from unusual.
(Score: 3, Informative) by crm114 on Wednesday April 19, @02:42PM (2 children)
Had to look it up. Same old thing.
(Score: 2) by GloomMower on Wednesday April 19, @08:16PM (1 child)
Yeah. I am still confused about it. It sounds like a mechanism to be a shortcut to an IPO without actually doing one.
(Score: 5, Informative) by Ox0000 on Wednesday April 19, @11:55PM
Yes, but also not quite, typically, a SPAC is a company that's empty except that it has a ton of cash allocated to it. It's an empty shell without any real business activities. This empty shell is then put on a stock exchange and undergoes the due diligence itself (as the empty shell); thus effectively inviting zero oversight or due diligence because it doesn't do anything and on paper it's healthy. Any due diligence can only look at this empty shell and on paper it looks fine. This is the main purpose of the SPAC: get listed on the stock exchange in a shape in which due diligence is meaningless.
Cool, when that is done, that's is where the "Acquisition" part comes in: now that you as the SPAC are listed on an exchange and have crossed that hurdle (you have undergone all the due diligence you needed), now you start looking for a non-IPO'ed company to acquire. By acquiring this company, you effectively put that company on the stock exchange (under your own shares) without anyone being able to do due diligence on the (acquired) company that would thus indirectly get IPOed.
In other words: the SPAC serves as a smokescreen for a future-acquired company which wants to get listed on a stock exchange but is probably very, very afraid of the due diligence that is associated with an IPO because of "reasons".
Why would one want to do this, you may ask?
Fundamentally, and now I'm editorializing, it's a new(er) form of Pump-and-Dump: create a SPAC and get it listed (not too hard) and then pump up the hype about your SPAC with as sole purpose to get everyone to invest in it with promises of "We'll find this 10x/20x/100x company/unicorn that we'll later acquire even though we have no idea who that will be, but above all: don't worry about it". This will pump the value of the SPAC shares because of demand. Every sucker with FOMO will want in on it.
Then all the initial SPAC investors get out and the SPAC is allowed to purchase 'something' (probably a dud) thus fulfilling its purpose of
acquiring somethingscamming suckers out of their money.Marketplace (and Make Me Smart, a sister-show of Marketplace - both highly recommended) did a couple of good explainers about them roughly 2-ish years ago when SPACS were all the craze. Here are some highly recommended links to critical SPAC explainers:
- https://www.marketplace.org/2021/03/05/spacs-blank-check-companies-public-offering-ipos-stock-market-low-interest-rates/ [marketplace.org]
- https://www.marketplace.org/shows/make-me-smart/spacs-are-turning-wall-street-into-silicon-valley/ [marketplace.org]
- https://www.marketplace.org/shows/make-me-smart/the-downsides-of-spacs/ [marketplace.org]
(Score: 5, Insightful) by Thexalon on Wednesday April 19, @07:54PM (2 children)
If only there were another open-source database engine that had been plugging along for decades, did its job well with minimal fuss, and has a stable organization behind it.
Oh, wait, that exists [postgresql.org]. There are many times I wish that had become the "standard" database for open-source web stuff.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 3, Interesting) by GloomMower on Wednesday April 19, @08:23PM (1 child)
Never understood it myself. MySQL had a some features that some people cared about before PostgreSQL. ACID compliance didn't really seem to be one though.
(Score: 1, Interesting) by Anonymous Coward on Thursday April 20, @09:04AM
But looks better to the PHBs who just counted how many features there are.