There are a few shorthand ways to gauge roughly how much FY19's results undersell the potential future earnings power of the software business:
- They sold $22.4m TCV in FY19, but only ($12.1m + $2.4m) = $14.5m was booked through the P&L because $7.9m of the $22.4m TCV sold as subscriptions will be booked in future periods. Hypothetically, if they'd sold $22.4m all in perpetual licenses under the old model, the software division's EBITDA would've nearly doubled (from $8.7m, to $16.6m). - TARR (maintenance + subscription revenue) at 23rd August was $28.9m, but FY19's P&L booked $24.2m; if you add the delta ($4.7m), EBITDA would've gone from $8.7m to $13.4m.
The $22.4m TCV sold in FY19 is the key, really - it was about 50% higher than their 5-year licence sales average, with the only other year they've come remotely close to that being FY17 when they sold ~$10m to a single customer. If that FY19 TCV of $22.4m represents a "new" baseline post the roll-out of the subscription sales model from which RUL can build, profits and cash flow will improve markedly over the next few years.
RUL Price at posting:
77.0¢ Sentiment: Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)