NEA (ASX) Am I The Only One ...

Originally posted by ARabies ↑

I had another read of the Investor Strategy Presentation that was released on the same day as the AGM and that may explain their rational for the capital raising.

Have a look at slides 15-17 (if I knew how to post them I would!) in particular and my take on it is the more they spend on sales/marketing/technology today, then revenue will be multiplied in years 2, 3, 4, 5 etc.

So IMO, and based just on the info in that presentation and the cap raise presentation, the plan is to:

1. Hire more staff and increase advertising/marketing to attract new customers now.
2. Capture more cities and more frequently to increase the potential customer numbers that we can market to.
3. Hire more staff to look after existing customers to ensure they are using it to the full potential so that when they renew the contract, they are aware of more features and benefits and pay more for the renewal subscription.
4. Spend on technology, again, so that when those customers renew their contract in 1-2 years, they upgrade to new features like obliques and 3D etc

I could be wrong but I think it will take at least 12 months for us to see the full benefit of the increased spending and I just hope they get it right.

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Thank you for your better explanation I obviously missed ARabies.

It raises more questions than it answers actually because their results appear to be showing that current spend is not yet profitable but if they ramp up new spending on advertising and marketing and extra staff it will be profitable?
Obviously we have fixed costs then we have sales and marketing costs to generate the income to cover all costs and head toprofitability as they win over more customers. Have they said what percentage of current costs are sales and marketing and if all sales staff are covering their salaries plus more fixed running costs and more for profit ? yes I realise it's early days but it will take longer than 6 months to see actual results I'd say but if they get it right then sure NEA will be flying higher than today's sp.