Great to see some more data today. Overall, a bit below my...

Great to see some more data today. Overall, a bit below my expectations on subscribers but good newsflow coming, so any weakness could be a buying opportunity.

Michael also did a Q&A on the 4C/company, which was hosted by PAC. Some things discussed and my take below for those interested:

• The prepayment was for an inventory build. In his words it was a "significant amount" and was for long lead time items to match the development cycle. It was also done to protect the retail price given supply chain inflation and manage risk.
• Comment: This is very smart. We have the liquidity, there is no obsolescence risk, so it's good risk management. They're not taking inventory risk as the orders are there and we're locking in prices now in an inflationary environment. If our competition do not do this and need to increase prices, then this becomes an advantage

• There was a question on ANZ subscribers, when we will see inflection and whether 15,000 subs by FY23 end is still achievable. Michael mentioned that forecast is still achievable, we should see some big quarterly adds coming and that they have been doing very good sales at the various "shows" i.e. boating, camping shows etc.
• Comment: This is front of mind for me too. ANZ seems to be lagging vs the North American market but our lockdowns were much stricter. If we're at ~2,600 subs now, we have 5 quarters to get to 15,000 - that's crazy growth. If Michael says it's still achievable, then upcoming quarterlies are going to have some BIG numbers. Even if we miss by 1-2k as an example, that will still be a run rate of +2,000 new subscribers PER QUARTER from here. That only gets us to 12,600. If we're going to hit 15,000 by June 2023 then the run rate will be higher. This should be a key reason why you wouldn't want to be selling now and/or you should be positioning. When the big 4C comes that shows the step change, the market will react and for a low volume stock, it can/will do wonders.

• He proactively mentioned that there has been early stage discussion on M&A. It needs to have applicability across existing products or synergies with existing products and it needs to have a recurring revenue model. An example he mentioned was specialised marine weather services and other satellite services
• Comment: I'm a bit lukewarm on this but it really does depend on the transaction, price and opportunity. I'd much rather they focus on organic growth rather than inorganic growth. My concern is also around using finite capital, but then the flipside of that is Michael and team could be that confident on the free cashflow that is coming that they're thinking of ways to deploy/invest it

• On the JV and providing more info he said this gets asked quite often. There's very tight confidentiality clauses on information. One interesting comment he made was that they want a way to value it appropriately given it's an equity investment. If they can change the carrying amount then this reflects in the balance sheet, NTA etc. So that should/could be one way to impact the SP without breaching disclosure
• Comment: This is pretty clever. Any positive change in valuation on the books also needs to come through the P&L (this is not the standard P&L of the JV but a revaluation change). While a traditional equity analyst would "look through" that number, it's still adds to statutory profit and is a great way to get an eye catching profit headline!

• He was asked if BCC was missing any key retailers. He said he's pretty happy with the mix but did mention they had struggled with NZ retailers due to lockdown. He also referenced that because they manage the online presence, they control the retail price. Retailers hate when prices on Amazon for instance are lower or when a customer can shop them. In Australia, the price is the same everywhere.

• The EU launch is on track. Expect an announcement in the first week of May.

• Enterprise sales are coming and reflect the long lead time. Get a couple of these and the impact on subscriber growth is material.