Reading through their announcement and forgetting the numbers,...

Reading through their announcement and forgetting the numbers, which are clearly horrible this business has a significant problem with investment. Their announcement mentions they have 100 developers working on productization, but are only looking at $1m in capex, compared to around $5m in previous years. This is worrying as capex is effectively new development whereas any opex is bug fixes, conversion of language, and coding and infrastructure that is not expected to have any future economic benefits. $1m as a percentage of their development spend is really insignificant and that lack of investment will have long term consequences, this industry requires investment to stay relevant and this view reinforces what I have heard from customers that their is no significant roadmap for their products and the products have significant support issues. Investing in capexable development will impact cashflow, but not profitability as it hits the balance sheet and then is depreciated over 5 years from when it goes live. I think this type of news will become the norm for this company unless they invest more in their product.

The numbers show a lack of project work as their non recurring revenue would be consulting or up front licence fees. As they have moved away from up front licence fees it will take a few years to make up the ground they have lost and their explanation that the market is down doesn't give much hope. They really need to come up with a strategy to re-invest in their product, upgrade their existing customers, and earn project work for doing this. From what I hear their product is essentially a on-premise solution that it hosted, so they really need to build it again as a cloud first solution which creates more connctivity with native cloud solutions. This is the type of investment cost conscious customers would see a benefit from. This company cannot keep coming up with bad news, they need to show they are addressing the situation and are looking at a long term fix.