Is 1-Page going bust?, page-66

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8horse

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02/06/16

22:07

Post #: 17939088
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Originally posted by TheLittlePrince ↑

The company lost $2.7M due to unnecessary forex risk. They had $24M in USD denominated treasury bonds plus cash reserves. Hedging strategies are lacking and this risk is not worth it in the low rate environment.

I have not conducted much due diligence on this stock and it has only taken my attention recently with the quarterly announcement.

Remember they may (most likely) be eligible for the R&D tax incentive which will provide tailwind for the cash burn problem.

The main problem I see here is the churn rate! I am not sure exactly what 'Source 3.0' is as I have not conducted much due diligence on this company however I note "customer feedback on the updated sourcing solution is positive and customer retention remains high at 90%". I assume this is a quarterly figure in which case the churn rate is 3.232% per month. This is a dangerous churn figure for an enterprise level SaaS company.

The highest correlated factor to post-money valuations of listed SaaS companies is not total revenue or revenue growth, but negative churn. Revenue growth correlates to post-money with a 0.18 R^2. Revenue correlates at 0.3 R^2. Negative churn, or account expansion, correlates at 0.54 R^2. Accounts have been expanding but at a slow rate relative to churn.

Especially as. if what they say is true, sales are focused in coming quarters they need to fix this issue otherwise it is shareholder funds down the drain.

Shareholders,

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My apology for overlooking $2.2m exchange loss on the US bond.

The $2.2m exchange loss on US bond was due to unfavorable AUD/USD movement from 31 January to 30 April (70.55 to 75.82), but currently AUD drops back to 72c, most paper loss is coming back. This is a hedge for their US operating base.

1PG Price at posting: 47.0¢ Sentiment: None Disclosure: Not Held
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Is 1-Page going bust?, page-66

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