I had a good read of this and although annual fees went up, they...

I had a good read of this and although annual fees went up, they had significant decreases in consulting services and the majority of their drop in overall revenue was due to this significant drop. They also received around $2m from a Callaghan Innovation grant and this may not be ongoing, so this doesn't look good.

The expeniture side is disturbing as their staff costs grew from $59m to $66m or around 10% despite having $8m less consulting revenue. Looking at their intangible assets (note 5.4) it doesn't look like they have capitalised much development, so I am not sure what all their salaries have been spent on. If it isn't building their new cloud product then it must have been used to fund customer support including bug fixes. Bear in mind their software additions last year were $5.6m. Lets forget about their impairment numbers which are another story. The lack of capex and the large impairments makes me believe they have realised the current product doesn't hold much value and they are only starting the build of the new cloud native software. This also makes me worry as this type of software takes time to build and sales in this period are difficult.

The write-up from the new CEO also raised concerns as he comes from AMDOCs and although they are quite successful they look to be a service company. That is something I gleamed from reading their annual report (They don't have significant intangible assets) as they talk about projects, rather than products). Gentrack is a product and IP creator which can be a very different business. He also mentions a number of hires which were all ex Amdocs staff which makes me question their direction and continuity.

I think a number of their moves are needed, such as building a new cloud native product, but I would treat them essentially as a startup with an established based they will have to win over once they finish the new product, with leadership that hasn't got product experience.