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This is a really interesting report. They mentioned in their announcement that the result was not as good as it was based on uncertainty in UK, yet their revenue grew by 36% in their main utilities market. This reeks to me of finding a convenient excuse, despite the result. The bigger concern is the decreasing revenue in Australia, 24% is colossal. Blamed on no new projects due to uncertainty in energy sector. This uncertainty has been ongoing for a long time, so it will also continue for a long time.
The bigger concern for me is they mention they are moving to the cloud and are moving their on premise release to the cloud. I look at the amount they capitalised this year at $5.1m, which was $3.7m last year. Depreciation ($9.4m) is now much higher than capitalisation which in my mind shows they are underinvesting now.The investment also does not reflect the effort required to move an on-premise solution to the cloud, especially considering their personnel costs are $66.5m. What are the rest of their staff doing? It certainly wasn't implementations with a revenue number of only $26m. This really shows they have a lot of legacy issues they must be dealing with in their current software.
Revenue has only grown by 7% but employee costs have ballooned. Why?
A lot of questions, but I can't see where these guys are going. Software companies have to invest to ensure their software remains relevant and these guys are not doing enough of that. Revenue is flat, costs are ballooning with no noticeable increase in assets.
