Ann: Investor Briefing Notification (FY24 Q1), page-5

Whenever companies are struggling [*], the thing I always look out for is the degree of variability in the message being communicated by the management of those companies.

Because when the story changes from one update to the next (i.e., new excuses are offered each time) then, as an investor, you know you need to run away.

But one thing about this company is that over the past 9-12 months as the share price was cratering, the tune being sung by its managers has not changed a single note; they remain consistent in their explanation as to why the Revenue-Cost jaws are not opening as fast as the market had been expecting and, importantly, are steadfastly of the view that the Revenue-Cost jaws will open before long.

[*] Or are perceived by the market to be struggling, more like it, in the case of this company, in my view.  Because, while the share price has struggled, that's merely an outworking of the starting point of market exuberance which led to over-valuation, which is no fault of management.



For context, Incremental Revenue drop-through to EBITDA is running below 30% and one would expect a technology-based business to scale up somewhat better than that rate:



Again, management are insistent that this sluggish scaling is due to the on-boarding cost impost, which also includes a large manual workflow component that initially runs in parallel with CCR's digital offering, but that once the system is fully embedded and the client feels it can sleep easy at night, then the manual drag is able to be wound back.

So their colours continue to be nailed firmly to that mast and we aren't going to die wondering if they were right: we'll know within the next 6 or 9 months.

And in the meantime, while we wait, the business isn't exactly burning a hole in shareholder pockets: it is growing its operating earnings - but instead of doing so very fast, it is merely doing it a little bit fast.

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