Ann: Share Purchase Plan Offer Booklet, page-11

Hi Mag,

You are probably underestimating customer size.
Rough and ready, (excluding land and expand) Take the growth in ARR and divide by number of new customers:
The average customer size/spend of new customers in the June Q was A$ 140,000
The average customer size of new customers in the March Q was approx A$90,000 (estimate due to Wizdom distortion)
The average customer size of new customers in the December 2018 Q was $134,000
The average customer size of new customers in Sept 2018 Q was A$120,000

The reason that Cost of Customer Acquisition is improving is a combination of more customer sales per marketing dollar and larger customers. (and because land and expand becomes more significant as the existing customer base grows)

I dont see that trend reversing.
40 customers x $140,000 = $5.6 million additional ARR per quarter, which unsurprisingly is close to current growth rate.

Using Cost of Acquisition (COA) model , one would expect 4-5 million additional ARR in Sept quarter (seasonally a weaker quarter) and 5-7 million in the December quarter (seasonally a stronger quarter + effect of the increased spend in June lagged by 6 months) which would see LVT at somewhere between $50 million and $52 million by end December 2019 and around $80 million by end December 2020. This model is outdated because it is static, does not allow for increased marketing spend as the revenues grow, and it takes no account of the $50 million raise. Nevertheless it independently confirms that based on current metrics and current product profile, they get to $100m ARR by June 2021.

Nothing new I am saying here that others have not already calculated in different ways.

I think we are all going to be revising models because
(i) We have to figure out how LVT is going to allocate cash resources. Per some earlier calculations A$ 40 million would have got them to cash flow break even. They had $15m in the bank at end June and have raised $50-55m. If they are wise, they will have enough for cash flow break even AND a cushion for strategic opportunities.
(ii) LVT are telling anyone who will listen that are investing in the partner channel significantly at present. This will lead to (a) Lower COA (b) Faster growth with lower cost of growth (c) Faster growth in smaller customers albeit it at lower margin (revenue share with the partners).......but at the same time, continue to land the large clients via their in-house team. If this works this will alter a lot of metrics and add an additional source of growth. It is not easy to execute a partner strategy. LVT have an existing partner network but I get the impression that it is a relatively small proportion of sales and they intend to step it up. I am going to guess that over the next twelve months , the LVT forum is going to spend a lot of time discussing, looking into and arguing about "partner sales channel"