Ann: Board Changes, page-34

Writer, I’m with you. I think a lot of the hard work of the past few years has set a foundation for better times. But i caveat that with as long as we survive this bear market in tech stocks. A $200k quarterly (outside of $1.8m prior quarter receivables) means we really can’t afford further customer program delays…

Tech stocks (outside of FANG stocks) have now been in a bear market for the past 3 years. 3DP remains reliant on capital markets and has followed a similar trajectory to most junior tech companies. So we’re not a lone soldier. And all bear markets eventually end and give berth to new bull markets. I’m hoping for a market vomit and a reversal in the direction of rates to end this nightmare

Why I remain optimistic about 3DP is I am of the view that companies that deliver productivity gains and significant ROI for their customers should benefit from an inflationary environment, as it forces companies to review how they do business and leads them to adopt new technologies. 3DP is in a sweet spot as their technology and value proposition is evolving, is customer driven (with market leaders) and very much in its infancy in terms of mainstream adoption across the verticals we operate in. This comes back to my comments about needing to survive long enough to enjoy the fruits of a new bull market and sector rotation back into Tech.

My biggest concern is we were told ACV was USD$20m a while back which implied AUD$7.5m cash a quarter (based on exchange rate conversion). Clearly that metric was wrong. On this basis I don’t think it is unreasonable to request greater transparency around past and future announcements, particularly as it relates to expected cash generation. Are we still working with most of the same clients that have been mentioned in prior announcements? Does management expect their previously reported ACV numbers to still materialise longer term? If not, what has changed? How did they get it so wrong?

One announcement that intrigues me is the Entergy Resiliency Program. Assuming 3DP analyse 4 million poles over 10 years, and assuming it is spread over the contract term, then this would generate predictable incomes much like a utility business. This would be easier to model than the historical ACV metric which was flawed and reliant on client uptake and usage, with very little insight into actual usage. If the announcement is at it reads, and can be replicated across other utilities, then this might be the nugget we need to generate sustainable and predictable cash receipts whilst we continue to massage/nurture all these other partnerships/deals (that were reported as ACV) that are slow to uptake and adopt 3DP into their workflows. An update would be most welcome, particularly in terms of the price negotiated per pole, as this program is slated to commence FY24.

I remain a supporter of 3DP and management. Lots of exciting initiatives across many verticals. Great customer names. But at the end of the day, cash is king, so unless revenue generating programs resume at a decent clip, then I would like to see internal actions taken to reduce costs over the next few quarters. Over and out.