@Vmk ResearchThere is going to be a nice sugar hit to ARR from FX rates which will mask some important underlying issues (one positive and one negative).
I think the most important aspect of this Q will be ARR growth in NA, which is indirectly related to cost control. The issue has been there for all to see since the HY report and I posted about it a while back. In particular
* N3 contractor (cold calling) expense has fallen in the last 3 HY's from 9.92m, to 6.63m and then to 4.65m. [The CFO mentioned last Q that they expect expenses overall to increase in Q4 so maybe they are planning to reverse this trend]
* NA organic revenue grew only 2.8m (annualised) from HY1 19 to HY2 20 whilst organic ARR grew 17.1m in the same period. This is half the rate of overall NA ARR % after the Wizdom and CYCL acquisitions.
Since N3 expense is a lead indicator of ARR the big question is - How will the reduced expense in HY1 20 impact Q3 and Q4 NA organic ARR growth? Clearly it has impacted Q1 & Q2 20 NA ARR growth. There is a major issue with NA ARR growth. LVT's major european competitor had a 70m CR in late 2019 and expanded into NA. Google search statistics now show a discernible difference between LVT and competitors in NA and the ROW (in favor of ROW).
So for me, NA will be the focus for 2020. For LVT to prosper they need to prosper in NA, i.e. 60% of ARR to be a success.
The other issue (positive) is upsells. I suspect LVT is starting to do very well in this area and that is the main reason for increasing subs.
