Ann: FY21 Q4 Conference Call, page-24

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SteveSage

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02/08/21

11:17

Post #: 54956578
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Originally posted by badkerning: ↑

If you go back and listen to the previous quarterly call (Q3), the CFO clarified this when asked the question.

Q: I just wanted to clarify, when you recognise revenue, for the purposes of ARR, as an example, is UnitedHealth fully recognised in the ARR figure?
A: So we take the revenue recognition and quantity accounting to Australian accounting standards. So as of when the performance and service obligations pass we're able to bill and recognise the revenue at that point in time. So typically, that sort of environment, from a SaaS perspective, it's when we make the license keys available for the customer, it's when we deliver the service obligations we've stated in the contract. So as Dan mentioned on the call earlier, there's quite a lengthy integration period that we have to run through with the company, given the complexity of the integrations we're working through. So it's generally sort of a six to nine months, sometimes at worst, six to nine months period from when we sign the contract to when we actually get the solution fully live. The period throughout that, we're able to take some of the revenue on the services components, but as we start to make some of the licenses available we're also able to take some of the revenues on that component as well.

Q: Okay, so at the moment, it's just sort of prorated? There may be some of it in there, but it's not fully recognised just yet? A: That's correct.

Q: So for any wins that you have during Q3, and Q4, let's just say you have a couple of great wins, it's going to be the same thing. So shareholders should expect ARR to fully recognise these perhaps months down the track, depending on the complexity of the implementation?A: Yeah, that's a reasonable statement. There's a delay between when we obviously have the contracts signed and able to recognise the ARR at that point, relative to when the integration support is implemented.

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@badkerning
Thanks for posting that; that seems quite conservative in the recognition of ARR (I mean certainly makes sense from a revenue recognition perspective), and different to the footnote in the 4C, but the question clearly related to ARR and the CFO confirmed that. Given it's not an audited number, I suspect it's also quite different across firms, but always good to see that mgmt have taken a more conservative approach.

It is however quite strange that they did not clarify on the 4C commentary how much of United and Nestle was included in the ARR (especially given everyone's obsession with that number).

Ah well......happy to see this come down to ~13c at which point its my next top-up......I mean MC that is ~2 times ARR seems highly pessimistic IMO

LVT Price at posting: 15.0¢ Sentiment: Hold Disclosure: Held
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