The ASX tech stocks set to reap benefits of positive cash flowAchieving positive cash flow is a big deal for tech companies, signifying self-sufficiency and opening doors to new opportunities.
Being cash flow positive means a company’s operations generate enough cash to cover their expenses, investments and debt obligations, and empowers them in several ways.
Positive cash flow can fuel further innovation and research. With steady inflows, companies can invest in R&D, expand their product offerings, enhancing competitiveness and attracting customers.
Cash flow positivity also enables tech companies to efficiently scale operations, invest in infrastructure and talent and explore new markets, all while avoiding cash shortages.Managing working capital and inventory becomes easier with positive cash flow while also improving risk profile.
It acts as a safety net during economic downturns and enables companies to navigate uncertainties without relying heavily on external funding or capital raises.
Cash flow positive also provides robust commercial validation that a tech product is highly sought-after, their revenue model is working and can serve as a catalyst for substantial value uplift in companies.
It can broaden the range of investors available to companies with mandates of many institutions restricted to investing only in profitable companies.
Despite challenging market conditions in the tech industry over the past couple of years, several ASX companies have emerged strongly with impressive results to be cashflow positive or close to cashflow positive. Here’s some notable examples.
IMEXHS (ASX:IME)Colombian-based medical imaging software and radiology services company IME is cashflow positive on a monthly run-rate basis, according to Morgans Healthcare analyst Iain Wilkie.
For Q1 HY23 the $20 million market cap company managed to generate $800,000 in positive operating cash flow
“The recurring revenue annually is around $20 million as well so about the same as its market cap,” Wilkie said.
“$800,000 of operating cash flow for a company of its size shows good progression and has been years in the making.
IME has expanded its global footprint for its software to 18 countries, with 449 sites and used by more than 3000 radiologists. It has also established 35 distributors in 15 countries.
IME’s has radiology operations in Colombia, Spain, and Mexico, with 35 radiology centres and over 150 in-house radiologists.
“The company has taken a new definitive direction towards profitability, with the quarterly results showing positive EBITDA and cash flow,”
IME CEO Dr German Arango said.
“The fully implemented cost out program is already delivering consistent results.”
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