Ann: Acquisition of XINN and successful institutional placement, page-12

The annualised MRR churn is 87% currently, the previous was 85%. Assuming that the product or sales strategy is improving even if the MRR churn is 89% you have to drop the ARR by 11% for expected churn.

87-89% is actually pretty bad for enterprise sales software with a land and expand strategy. The quality names often generate 130-140% MRR churn figures (such as twilio, datadog etc). Anyway, if the product or sales strategy keeps improving then the actual number itself is meaningless but you can’t just add on the acquired revenue without taking away expected churn.

I had been working off the assumption that the underlying unit economics are favourable for BTH based on management data, but it is very hard to tell with the numerous ongoing acquisitions. The top tier companies in my experience do not acquire this much this early- they generally do strategic bolt on acquisitions or acquire when they are behemoths.

Without knowing the details the exec bonuses could be fine. Moreover given the incentives materialise in a very short timeframe, without a clawback provision, the incentive may be to increase ARR indiscriminately without considering the effects of churn. On face value the thresholds appear difficult to meet - current ARR is 2m USD and shares are only issued at >2.5m USD with <3 months to go, one would have expected that given the lead time for sales to enterprise clients, the expected ARR will likely be known by now depending on where the leads are at.

I will follow it and see what I learn about this decision over the next 2-3years,