Ann: Appendix 4E and FY20 Annual Financial Report, page-181

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21/08/20

14:55

Post #: 46722442
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Originally posted by austted: ↑

The article in today's AFR's Rear Window about how Nearmap reported churn in its FY reporting gives an inkling.

I was so annoyed with the reporting that I emailed the following to the writer 'tom.richardson@copyright link'

Just readyour piece in AFR;s Rear Window about how Nearmap reported churn in its FYreporting.

I mustdeclare I am a long term holder of Nearmap.

That churnby "a small number of large enterprise customers" that caused the churn rate to risefrom 5.5% to 9.6% was due to two specific reasons – a delay in the take-off ofdriverless cars and the case you mention one customer subject to a court injunction in the US. These are extraordinary circumstances outside a normal understanding of churn which I believe relates to customers moving to other suppliers or otherwise unhappy with the product.
As you say “churn is a closely watched metric by professional analysts as it provides insights into the strength of a product offering and how much ability a company may have to lift prices without losing customers.” And “Churn also impacts analysts' calculations over the lifetime value of a subscription portfolio and future profitability. Normalising it to exclude customers lost in the ordinary course of business doesn't make a whole lot of sense then.” I agree.
The problem these so called losses were of prospective customers who wanted to take up the product and were either prevented by a court order or had to delay because of the delay in the take-off of driverless cars.

This havebeen well reported and understood by shareholders who follow the stock.

Expand

Surely "loss of prospective customers" is not included in the churn statistic? You need to be losing an actual paying customer for it to be churn.

NEA Price at posting: $2.66 Sentiment: Hold Disclosure: Held
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Ann: Appendix 4E and FY20 Annual Financial Report, page-181

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