The problem with ALC is that the operating leverage, of which there were signs earlier on in the company's history, remains elusive.
While ALC's service offering is definitively technology based, the problem with the business is that it is fixed cost heavy, with a long sales cycle and high customer acquisition costs.
The result is a cash cost base that keeps growing at a similar pace as the cash receipts base.
Sure, the argument might be that they are investing in costs in order to grow the top-line and that the Receipts-Costs jaws will open at some point.
That might be the case when you are at sub-scale, but $30m pa in Revenue is easily a meaningful enough base off which your average services business should be able to do a lot better than merely cash-flow break even.
It's been 7 years of listed life, so its not as if the company hasn't had the time to get there.
And until it is able to demonstrate increasing FCF, I can't see the market ever viewing it as a $400m company like it did at one stage.
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ALC Price at posting:
19.5¢ Sentiment: None Disclosure: Not Held
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