Ann: Q2FY19 Operating Update - Investor Teleconference, page-6

Sorry for the late post.

I didn't take notes.

Call was upbeat and very short.

Two analysts asked questions and one private investor.

Key take aways for me:

- The R&D rebate was material in getting to cash flow positive, there is a good chance of 1 or 2 qtr below or around break even without it. This was implied, not stated black and white.

- Revenue growth is on trend to make it a close call if it continues.

- Corporate/enterprise market growth is very good (I am super pleased to hear this, as it has been the key plank in my investment thesis)

- Are dividends on the horizon? paraphrased "Let's not get ahead of ourselves, but a return to shareholders is a priority along with funding growth"

 

I think there are plenty in the market who dismissed this stock as a consumer service provider who offer little beyond what their competitors are offering. I think that is partly true, and the consumer business is vulnerable to whoever has the lowest price/top google placement.

 

I think the wider investment community will reassess and understand they used that initial consumer vehicle to:

- grow revenues to make fixed costs a smaller part of the balance sheet (gain economies of scale)

- list and gain access to equity markets

- acquire the NZ business with its annuity revenues, growth prospects and government credibility

- develop a corporate 'full service' background check business

- grow corporate market revenues quickly to provide"sticky" repeat business customers

 

Once you integrate an enterprise customer to use the service for their employee background checks, the cost of each incremental sale becomes very small.

With a consumer business you need to make the sale each time, with attendant low margins and google marketing costs.

 

It would be great to see this reflected in the financials in12 months time conclusively showing the corporate business is very profitable and provides both consistent month to month revenue, plus substantial growth as new enterprise customers are signed up.

But when that has happened, this will not be a 7c stock.