Ann: Strategic Business Update, page-2

Great update, I'd been pulling together some of my thoughts as we get closer to the HY announcement.

Netsuite Event:

JCS blog confirms their attendance at the big Netsuite event held in Sydney in mid Feb, so hopefully some good networking potential comes from that

http://suiteconnectsydney.netsuite.com/home



Staffing:

On my online travels had a look at their linkedin geographical breakdown, which presumably is broadly accurate (probably more so for the recently established Asian business, certainly is possible that there are previous employees who haven't updated their profiles?). It suggests there are total 76 JCS employees, with 11 based in the Philippines and 6 in Singapore, accounting for 22% of the total JCS workforce, all dedicated to the Asian growth strategy. Personally I was surprised by the number already employed in the Philippines (11), with an additional role in both the Philippines and Singapore still being advertised on their website.

Presumably if these employees generate roughly the same revenue as their Australian counterparts, that would see circa +2.5m-$3m in additional revenue (currently JCS Asia generated ~$355k last FY). Whilst this isn't likely to happen overnight, with the above announcement, JCS Asia could well be already over 100% YoY revenue (depending where the revenue is booked). "The Company won its two largest new customers in Asia, with contracts worth in excess of A0.4m of combined contracted sales income over the contract periods". Illustrates nicely the increasing deal size. If JCS Asia can start kicking goals of this magnitude, the $2-3m revenue level I hinted at above might be achievable in say 18-24months?


https://www.linkedin.com/company/jcurve-solutions/people/
https://www.jcurvesolutions.com/careers/
https://www.asx.com.au/asxpdf/20200128/pdf/44djvdxs4q7dnh.pdf


Riyo:

The Riyo webpage looks fairly polished. Both Australian and Singaporean customers can now request a demo/walkthrough and a order a free guide titled "How to adapt your service business". Sounds like the pilot customers (mentioned in the most recent  annual report) have received the product well, and JCS is now marketing and pushing for cross sell with full gusto. Last FY Riyo booked a paltry $3k in revenue, so plenty of blue sky potential here. Today's update is fairly bullish noting "Strong opportunity to establishe a world leading solution"

https://www.jcurvesolutions.com/riyo/



My views for the Half Year (mid Feb):

Hoping to see further ERP customer growth in the core Australian business. Last year's H1 they had 34 new customers. Given the previous 'headwinds' comment, anything in the ballpark of 25+ would be a solid effort IMO, combined with the increase in deal sizes. This might correlate to a 2-3% in ERP revenue for H1?

EBITDA - previous H1's have seen small losses (-100k), Anything positive or close to square would be ideal. However I suspect with the Asian growth strategy and corresponding hiring 'spree', we might see a small loss with a comment on the lead in times and settlement of additional business in H2, so realistically wouldn't be surprised if there is a ~300k headline loss. Will all be in the commentary...

JCS Asia/Spectrum - with the CEO on the ground in Singapore for nearly 6months, I'm hoping for revenue gains (perhaps again noting business due to settle H2) of anywhere from 25-50%+ (A0.4m booked over the contract period) , this might equate to circa 100-250k revenue increase over the H1 period, but likely loaded towards the second half.

Riyo - Pilot complete and cross sell looks to be underway. Would be good to see some concrete customer numbers, although I suspect free trials and minimal revenue upfront as JCS look to gain some traction with this offering into H2.

With that in mind, I can't see the H1 metrics driving a massive re-rate in Feb (unless they knock things out of the park). What I'm ideally looking for will be a revised 2020 outlook that confirms or improves on the Nov-19 guidance provided range.

From here in Shareprice action, a move back north of 3c would be a good starting point. But good to see an update, and looking forward to the Half Year report.


above are all my views and opinions, DYOR etc...