Ann: Quarterly Report, page-7

For CXZ, the most important variable is the level of dealer inventory, which has been suffering since Q3 FY21 due to the semi-conductor chip shortage. That appears to be showing signs of recovery now for GM, based on the chart below (subscription-based SaaS revenue). Although, in management's typical conservative style (great) they are not claiming that yet.

In saying that, the main risk that I am watching is that dealer inventory levels may never return to the pre-COVID peak (Q4-FY20). We've now had a couple of years of dealers operating with very very low levels of inventory and they have found ways to work around that. So I don't expect that they would give up those efficiencies -- there should be a recovery, but I personally don't think we're going to go back to pre-COVID dealer inventory levels.

Overall, it looks like the share buy-back has put a floor in the share price for the moment at 1.0c. I think that was a very smart move, particularly given their profitability and high level of cash in hand relative to market cap. It reaffirms the belief of the company that the current share price is undervalued at 1.1x EV/GP [A$8.8m MC, A$3.75m cash and investments, A$5.05m EV, A$4.59m GP, A$1.04m EBIT]*

I think Aaryn is playing a very long-term game here, which I like and I also like the fact that CXZ is not at the mercy of the market (i.e. a capital raise). Fairly cheap on all multiples; revenue [0.87x EV/sales], gross profit [1.1x EV/GP] and EBIT [4.9x EV/EBIT], and the upside opportunity (other than multiples expansion) is the co-sell of other services (ie. the tolling pilot), new OEMs (they finally have a chance now with Ford and Lincoln) and the GM recovery (led by an increase in dealer inventory numbers). As long as they re-sign GM again in 2026 and retain key talent, I am of the belief that we will see a consistent path of steady gross-profit growth.

* For gross profit and EBIT, I've taken Q4-FY22 figures of US$795K and US$180K respectively, converted to AUD at an FX of 1.44x, and annualised (x4). Gross profit has increased quarter on quarter now for 4 consecutive quarters and is now at an all-time high.