one item I am perplexed by is in their strategic review that LVT are aiming to achieve
BY 2024 -
As I read this, say they have 2.3 million licenced users and this quarter they added 60,000 licensed users (calculated their annual cost per user roughly $28. $1.7mil increase represents roughly 60K users at $28 per head per year).
So just say we increased users from 2,240,000 mil to 2,300,000 mil this quarter, this represents a roughly 2% increase in users (im going to low ball and say 2% (even though it'd be closer to 2.5%)). Assuming 2% is currently the average, If LVT are looking to experience minimum 5x growth, then they are setting themselves up to increase users by 5x that minimum (10% per quarter). That'd be looking at roughly 224,000 - 240,000 users gained per quarter approx (as opposed to the roughly 60,000 users now). At minimum 5 X growth as outlined above, they would be looking at adding approx $5 mil a quarter in ARR with approx 230,000 users added per quarter.
One item that is encouraging though is if you look at the sales and marketing of LVT compared to comparisons such as Elmo/BTC/Nitro. Livetiles has really stripped back sales and marketing, drastically! To get the growth drivers going again they will need to really ramp up spending here as the world gets global out of lockdown again. They need to get sales teams getting the word out. Good timing seeing as they will soon be able to be doing it off their own coin. I know we stripped back N3 to save costs in the long run and move sales operations in house, but I wouldn't be adverse to ramping up the external sales once the bank coffers start to build again.
Build the bank coffers and start building for growth again. They've turned the growth taps off a bit in the last few years understandably to conserve funds, but if you look at the likes of say Elmo that's sitting just shy of 500 mil market cap, yes they have been on an acquisition spree but they've been able to drive organic growth because they've spent 30 odd million on sales and marketing, we've spent half of that and still grown at an ok rate.
The market won't care if LVT are spending for growth, provided they are covering their expenses with cash receipts and the growth is there (and the word "credit raise" is a distant thing of the past (which it seems to be)). The growth will be there once they get into a position to spend again on their own coin.
