I think you are correct in that interest income is non-operating...

I think you are correct in that interest income is non-operating earnings (although, with a negative working capital cycle, your sentence, "...imagine if they had to start paying money to the bank instead of collecting interest" makes zero sense.)

But only partly correct, mind, because if one wants to properly assess a company's financial performance, then one needs to look not only at what's driving the Revenue line, as you have done, but also on the determinants of the Operating Cost line.

While that interest income serendipity to which you refer is easily observable, what requires a bit of mental effort is to assess what unusual things, if any, might be happening in the operating costs of the business.

And on that score there is ample evidence of management investing ahead of the curve, with Cost of Doing Business (i.e., employee expenses, which are DTL's largest single cost item) in calendar 2023 running 14% higher than pcp (this commenced in JH2023 (+19% on its pcp) and continued into DH2023 (+11% on pcp).

While some of that increase will reflect inflationary impacts, it is certain to reflect a significant element of putting in place resources that will be currently earning their keep in terms of service capability and product development, but not yet in terms of generating Revenue commensurate with that added capability and development.

Indeed, this was confirmed - in the usual coy and understated fashion of DTL's management team - during the result presentation, notably in relation to the advent of AI, which has only just come into the line of sight of DTL's customers, and a lot of work is going to be required to get them ready for it.

So there is a clear timing difference between on-boarding of Costs currently, with related Revenue still to follow.

And follow it will; of that I have no doubt.

What's happening today reminds me very much of the period in around 2012/13 when DTL management at the time invested heavily to position the business to be able to service the great global transition to cloud computing. Due to the costs that were incurred, earnings were constrained for a period ahead of the invoicing curve, but once the related invoicing started, the company's profits supernova'd for the next decade.

I think that is a reasonably relevant analogue for what's happening currently.

Of course, while management gets paid to think and act with multi-year time frames in mind, the focus of 99.9% of the participants in the equity market is measured in terms of hours; at best, days.

'Twas ever thus.

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