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15/06/20
18:51
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Originally posted by Roy2U:
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You are correct, Pioupiou, particularly in relation to NEA being "highly scalable" and with "high fixed and semi-fixed costs with very low varied-by-volume costs". Now that NEA is focussing on keeping costs down to reach cash flow positive by June 2020, the above becomes even more significant. I believe they can keep their costs very close to stable for the next 2 years and more, which would result in very rapidly growing cash flows depending on the % growth rate of revenues. Back on January 30th, NEA was confident that ACV growth could continue in the 20-40% range. Although their latest guidance of ACV between $103-107M implies a Group growth rate of around 16% for this second half PCP, I think that by the second half of next year, they can get back to a more typical 20-40% as the NA market becomes more sizable relative to ANZ. If so, that will really power free cash growth.
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