As the poster of the *** content, I'm happy to see it getting recognised on other stock related forums.
My latest post is as follows;
Attached are some notes I had written down during MSL's full year results presentation.
Question - Will re-seller revenues decline further as MSL focuses more on SwiftPOS?
Noting that SwiftPOS is NOT reselling revenue and the margins are much higher as a result.
Reselling, predominantly through Kappture, is preminent in 'stadia' and thus the UK section of business for MSL. Contracts such as CFG (Man City) deal will be through Kappture, as will ASM global.
SwiftPOS is more dominant in the Australian market.
Given Pat has mentioned that he expects the UK to grow substantially as a % of market share in FY22 and that this UK revenue will largely be reseller,the answer to the question was effectively no.
Reselling still presents a good opportunity for MSL. It is low cost and easy to deploy to customers, allowing the business to service clients through other means that MSL can't.
Question - What are the margins for reseller software vs inhouse?
Gross margin for inhouse software is identified as 100% really. The costs for this software are considered to be sunk costs (costs already incurred). The only costs are considered to be a part of overhead or fixed costs.
This implies a) 100% gross margin and b) massive potential operating leverage if top line continues to grow!!!
Re-seller margins are obviously lower. They buy the software, mark it up and then re-sell it. No figures included but it's obviously a lot lower.
Question - relating to gross margins and product mix.
"we won't chase revenues for revenues sake". In saying that we expect significant growth moving forward!
We expect to experience "quality" revenues.
Question - Can you explain the Doshii agreement?
Note - Doshii paid a significant amount of trailing commission upfront. (Actually two years worth). This is probably already recognised.
Question - Sales pipeline
Pipeline in Australia obviously quiet due to lockdowns.
Pipeline in the UK is very strong given they are now fully open. Signifcant growth in the "millions of pounds" over last few weeks/months.
Looks like we can expect good top line growth, particularly in the UK in FY22.
Question - Cost base run rate
They are working toward a rounded cost base of $18m for OPEX. I get the feeling Pat is super cost conscious and won't throw money at things unless it's really needed.
Lot's of capital consuming areas of business have been wound down which hsa resulted in a lower OPEX now than in previous reporting periods.
The cost base is now stable. Gives MSL the opportunity to begin to scale and open the revenue-cost jaws and grow the overall group margin.
No major changes in the cost base, though it will rise in line with inflation/naturally trend upwards as the business grows in size.
Massive focus on keeping positive in operating cash flow's and EBITDA !!!!
Question - M&A potential
The board has & management has demonstrated the ability to well integrate a new business into MSL's solutions. In the past they have failed to do this and shareholder value has transitioned through to the acquired companies shareholders.
I get the belief that the % of successful acquisitions is somewhat dependent on management's ability to integrate new solutions. Given Pat & the team have demonstrated this with SwiftPOS I would say there's a higher probability that each M&A deal is accretive in terms of MSL shareholder value than the average acquisition.
There's obviously no certainty, but you'd tend to bet on the horse that won the last race.
The cash balance is sufficient enough to absorb an acquisition at current times.
Question - relating to the inflated multiple for the Plexure/TASK M&A
"we can't control other multiples".
The focus is on us. Positive cash flows's, EBITDA etc.
"let the numbers do the talking" A great attitude to have. The market can think what it wants.
Overall, some great comments relating tooperating margin and cost base stability moving forwards.
Pat & the team are really tuned to develop top line growth for MSL that will seemingly drop straight to the bottom line.
We will see this next at the half yearly result for FY22 andMSL are now exempt from reporting 4c's (via ASX).
