Ann: Half Yearly Report and Accounts, page-52

I thought this was a really solid result from a well run company.

NA seems to be growing at a really healthy rate but what I really like about this company is that the management is conservative in their claims and ensures that the business remains healthy. I like that they have no debt and that they never over promise.

The main criticism on the forum is that they haven't turned a profit. However, they are following a long proven formula of investing heavily in the early stages of a new industry to ensure that they become a market leader. NEA is clearly on that track, establishing its business in Australia and then as soon as it possibly could, developing in NA. A quick look at the numbers indicates that their revenue is about the same in AU as NA, but the NA market is about 15 times the Australian market, suggesting that they are nowhere near saturated and that they should be investing heavily while they are growing rapidly in that market.

NEA could be profitable now if it wanted to be, but that would come at the expense of future growth. In NA, they will do what they did in Australia, invest heavily in the early stages and grab market share and when the growth rate trails off to high single digits slow the investment and monetarise the growth. They will do the same in NA - this is the Amazon model, which companies like Tesla are also following.

However, share prices are subject to greed and excessive pessimism and the ride for shareholders will always be difficult. At $4 the share price ran ahead of itself as greed kicked in with an ever rising share price. Now, excessive pessimism has kicked in - the concerns about rising interest rates which have hammered tech stocks do not apply to NEA as they have no debt - the increase in investment should not be a surprise either as based on Australia they have reached less than 10% of the potential market and are in the growth phase. The share price is not distracting management who seem to be getting on with growing the business as well as they can rather than pandering to the market. They managed the growth of the company well in Australia and have started well in NA as well (and the beginning is the hard bit).