Our thoughts on SAAS companies like LVT involved in cloud based workspace are that there will be three phases as a result of CV19:
Phase 1 : Surge of Interest/demand due to remote working. This will generate some increased revenue and a significant pipeline of leads. LVT and others have extended special offers (LVT has offered some packages for free with an installation fee to cover cost) to be seen as helping SMEs , but also generating leads for the future, Growth but some of the revenue from that growth will be lagged to phase 3.
Phase 2 : Regrouping . As we emerge from CV19, there will be a "regrouping period". Enterprises will be addressing priorities of restarting their.businesses. Decisions about new software installation and acquisition will not be priority #1. Smart, customer centric SAAS companies will be sensitive to those priorities and not push for "make a decision now!" . Pace of growth will slow. Companies like LVT will grow faster than others but not at the same rate of growth.
Phase 3 Growth Resumes at High Pace. The benefits from Phase 1 kick in. Customers who had a good experience from temporary solutions that they signed up for in phase 1 sign up for more permanent solutions. Large enterprises who delayed decisions in Phase 2, accelerate decisions to catch up with digital transformation. ARR surges in well placed SAAS companies like LVT. Companies achieve record increases in ARR.
It is hard to judge the length of each phase.
Im guessing phase 1 will be 3 months overlapping quarters. Phase 2 will be as short as 1 quarter, possibly 2 quarters. Phase 3 will last for at least a year and will extend depending on the company.
My advice to LVT (not that I would presume to give them advice) is NOT to ramp up cost due to the excitement of phase 1. Remain on track with cost control during phases 1 and 2, letting growth get the company to cash flow break even, and only stamp on the accelerator again in phase 3.
My 2 cents
LVT Price at posting:
20.0¢ Sentiment: None Disclosure: Held
