The company\u2019s Theatre and Entertainment segment underperformed but there are promising indications from D-Box Technologies (D-Box Technologies Stock Quote, Chart, News TSX:DBO) Simulation business, says Echelon Wealth Partners analyst Rob Goff, who delivered an update to clients on Wednesday where he reviewed D-Box\u2019s latest quarterly earnings. Montreal-based D-Box Technologies on November 14 released its second quarter results for the period ended September 30, 2019, featuring total revenues of $6.3 million, down from $8.1 million a year ago, and adjusted EBITDA of $0.1 million, which was the same as last year\u2019s Q2 at $0.1 million. D-Box CEO Claude McMaster said the Q2 results were lower than expected due to a number of factors including constrained capital expenditures within existing customers, international economic uncertainty and a lack of large project deals. \u201cDiversification of our revenue stream remains key to our strategic plan as we expect Commercial Entertainment and Simulation & Training revenues to grow at a faster rate than our theatrical business,\u201d wrote McMaster in a press release. \u201cGoing forward, the focus will be on the commercialization of new products, execution of strategic partnerships as well as enhancing our focus on profitability starting in fiscal year 2021. I am optimistic that these initiatives will pave the way to significant value creation for our shareholders,\u201d he writes. Goff called the second quarter a tough one for D-Box, whose consolidated revenue and EBITDA were lower than his estimates of $8.5 million and $0.3 million. The analyst noted that D-Box\u2019s adjusted EBITDA margin improved, albeit marginally, by 20 bps to 1.8 per cent versus 1.6 per cent a year ago. Goff expects the company\u2019s revenues to be lumpy on a quarter to quarter basis but that cost control measures put in place will ensure consistently positive EBITDA levels. But trend-wise, Goff is positive on the name, saying that with box office revenues currently (and for the foreseeable future) challenged by secular competition and with revenues increasingly hit-driven, theatre companies are motivated to increase revenues per patron, hence making D-Box\u2019s solution a strong differentiator on both patron yields and overall attendance. \u201cWe are bullish on the long-term potential of D-BOX\u2019s technology and high-quality client base both in the Entertainment and Simulation segments. While the Company deserves credit for its financial discipline as it manages growth investments to maintain positive EBITDA, we look for stronger revenue momentum to be rewarded by a coincident positive revaluation,\u201d writes Goff. The analyst adds, \u201cNevertheless, it is difficult to predict the seats\u2019 order size from OEMs like John Deere and Caterpillar Inc in a particular quarter, making it difficult to predict the revenue for the simulation and training segment where we are conservative in our forecast and ~7 per cent y\/y growth for F2020.\u201d \u201cThere is an upside to our forecast considering that D- BOX is the only motion technology partner for the major OEMs. These OEMs order in advance and new orders would depend only on the existing inventory at the OEM side that can not be anticipated,\u201d he writes. With the update, Goff is maintaining his \u201cSpeculative Buy\u201d rating and $0.25 per share price target which at the time of publication represented a projected return of 127 per cent.