W.r.t the sell off, I think possibly the market is trying to place value on the below screenshot statement (+Nasdaq sell off). DSE always report in constant currency and IMO have always acted with integrity and honesty when reporting. The reality is they have advised the market that churn near on doubled from 3% to 5%. Increased competition is the reason, and increased competition has the potential to squeeze margins... So probably a forward looking sell off.
That said gross margin was maintained at 69%, but I expect to see this reduce in the future, and could impact ARR growth.
DSE has a track record of honest reporting, I'm not concerned with the sell off or with the quarterly. The constant currency ARR growth (USD as most revenue denominated in USD) over the last 4 quarters is Jun23 9%, Sept23 5%, Dec23 7%, Mar24 7%. Even if we pick the weakest quarter and annualise we are at 21% annual growth rate (5% QoQ) and that increases to 31% at a 7% QoQ growth rate.
MC - A$180M, EV - A$155M, ARR - A$37M... So EV/ARR only 4.2 - I don't think that's a challenging valuation. Especially since this management team has continually delivered on what they said they would...
My opinion only, but buying quality on weakness has worked in the past on DSE.
DSE Price at posting:
26.0¢ Sentiment: Buy Disclosure: Held
