Preliminary Comment:The top line number was $1m higher than our...

Preliminary Comment:

• The top line number was $1m higher than our educated guestimate and 0.7m lower than Citi's dart throwing.
• However we need to make a couple of adjustments to compare like with like. The report mentioned negative FX translation effect. The US Dollar is down approx 4.7% over the quarter and the Euro is down approx 1.2% . 40% of ARR comes from North America and 40% from Europe. So on the decline in those two currencies would have reduced total ARR by approx $1.25 million ($980,000 US and $270,000Europe). On a constant currency basis ARR grew organically by $6.3 million +/-
• We were light in our forecast but I warned that it was going to be a hard number to figure out. We still believe it is much too early for the investment in the partner channel to have paid off, so this number indicates to us that the Direct Sales channel has picked up again and this sets a base number that the partner channel can add to.
• We would not move our Q3 (March) quarter forecast but we are adding $1m of ARR growth per Q thereafter.
• We dont know if the comment on small customer churn implies a significant number in terms of ARR or if the management are preparing us for the number of customers not to have grown as much as the growth of ARR would suggest.
• (As a total guess we suspect that LVT are getting tougher commercially about the cash cost of supporting small clients paying less than $5,000 per year that LVT were eager to take on when they started the business but we suspect were either low profit or even cash negative customers. There is a level of support for any SAAS customer and if you dont provide the support, they will have a faster fade rate. We are speculating based on the earliest LVT presentations where the average customer size was very small.)

Conclusion : Very Solid numbers (especially adjusted for currency) but market remains skeptical until growth accelerates via partner channel