When did you sell?

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MattKeaton

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25/11/24

21:40

Post #: 76772082
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Originally posted by acwmr: ↑

Looks like they took to Powercloud with the chainsaw... I held for a couple of years but lost patience.

From Shaw and Partners Circular
1) Powercloud will return to profitability earlier than expected. In just 9 months, HSN have listened to Powercloud customers and refocused the business on the DACH region and its leading RCS solution. Headcount has been reduced from 390 to now 140, with run-rate cost savings to date of now $27m. This now ensures the business will be profitable in coming months. There is significant upside in the German market as it transforms and there are more potential medium-term savings available also. This is an impressive update, reinforcing HSN capability in cross-border M&A. We estimate Powercloud burned ~$25m cash last year (HSN only owned for 4 months) and this year it will likely burn less than $10m and assuming revenue is maintained at ~$44m should be low-single digits cash positive next year! And don’t forget HSN paid just a little over 1x revenue for Powercloud including funding all cash burn. This highlights that for management teams that know their industries, back themselves and think outside the box, they can navigate the challenge presented by private capital. 2) FY25 guidance reaffirmed and the 2H skew should not surprise. Despite experiencing some FX headwinds in the first few months HSN has reaffirmed all its key guidance pointers including revenue, u/lying EBITDA and Cash EBITDA. The 2H skew should not really surprise, as it is largely driven by timing of Powercloud synergies, renewals and upgrades etc. While some investors may argue a 2H skew means they can wait until the FY25 result, we feel the insight on the Powercloud cost-out is powerful. Our advice, investors sceptical on Powercloud back in Feb missed the first $1 of upside, don’t wait and miss the next.

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When did you sell?

HSN Price at posting: $5.57 Sentiment: Hold Disclosure: Held
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