Evening All
Bit late to the party with my thoughts on the Pointerra 4c. I will attempt to build on the coverage provided by others with some personal observations.
Let’s start with an extract from the ’Outlook for FY23’as provided by Ian Olson in the FY 22 Financials…
‘As we move further into FY23, the Company remains laser-focused on balancing our ambitions to deliver exceptional organizational and financial growth with a disciplined approach to financial management. Success will likely result if we are able to focus on the biggest drag on growth – identifying, onboarding, nurturing and retaining exceptional people……. ‘
At the time, I interpreted this as ‘Our future success is only subject to acquiring/ retaining the correct skill-sets across the organization’.
So how have they done over the first 6 months of FY23?(I will park the shocking AUD 1.9m Customer Receipts number for now)
Pointerra have never been light on the narrative. In fact, they have often been overly generous with the amount of information shared. Over and above the headline news on three new Contracts, the latest 4C carries more information on progress than anything before.
Herewith a couple points, which highlight real progress:
- A ‘material’ Financial contribution by the Transport, Mining and Oil & Gas sectors, this reflecting the continued development and adoption of the higher-value elements ‘Analytics’ & ‘Answers’.
- The integration of Emesent & Pointerra 3D. This will fuel Commercial opportunities with a leaning to ‘Analytics’ and ‘Answers’
- Successful POC with Velociti & Amazon which will culminate in an impressive Scale-up.
- Pointfuse Integration. A key milestone in the Company’s AEC strategy.
- FPL moves to a Full-Suite Subscription, this a natural extension following a number of successful PAID POC programs. Will extend to include a Vegetation Growth model and POC (FPL Parent), targeting operationalization by End CY2023.
- FPL’s Advocacy provides a valuable ‘blueprint’ for scaling other investor owned Utilities, driving faster onboarding and lower cost of customer acquisition.
- Expansion of Services to Tier 1 Mining Companies, where 3D Point Cloud data acquired via Slam Lidar in GPS denied underground environments. Again, a POC process and then scaling, a vast opportunity for each Mining Group.
- The capability developed for the Transport sector (Road & Rail) has been further validated by the Award from Main Road, Western Australia. Another endorsement, which now allows Pointerra to target new geographies, incl. Europe, the UK and the USA.
The above says to me the Thesis is very much intact, the growth story is alive and well and the momentum is set to continue.
Looking at the ‘Poor’ Customer Receipt number, AUD 1.9m is less than half of what I expected (AUD 4.0m to AUD 4.3m). The Company have cited program delays by some USA customers impacted Invoicing and Cash collections. Given this pertains to a single QTR, we need to accept that this was unforeseen. Unfortunately,anything causing a delay to invoicing will show up again in the HY Financialslater this month.Most likely why the Company suggested we would see a rebound over the next two Qtr’s (Q3 & Q4).
Before commenting on the ACV saga, would like to highlight an area of concern. A pattern is emerging which centers on the back end of the sales process, this being to collect money. In FY 2022, we had an impairment of AUD 1m, where a customer did not meet his obligation, was freed of that obligation and according to the Company, remains a customer. In Q4 FY 22, the Company reported Customer Receipts of AUD 1.66m (Poor), qualifying that Accounts Receivable totaling AUD 2.54m would have otherwise contributed to a net cash inflow from Operating activities for both the QTR and the FY2022.
In my opinion, time for Pointerra to employ a Financial Officer who is held accountable for delivery on this front. This is directly impacting on Investor returns.
Now, a brief comment on the much discussed disconnect between the reported ACV (in US $) and the Customer Receipts or Revenue. If we consider that Pointerra alone selected ACV as a preferred measure for their business. They then established the criteria / rules to account the ACV number. All self-determined. They keep on citing examples of why the disconnect is amplified eg takes time to get the data etc etc. The Company has several years of history. Apply factors to the numbers based on real-time issues and history. They could do this openly with shareholders, analysts etc. A ‘once off’ step-change and fixed forever. I know of more than one Adviser who will not touch Pointerra for this very reason.
Seen a couple of comments suggesting the Company ‘sneakily’ left out the graph reflecting the cumulative QTR-on-QTR Cash Receipts. Just like to remind those that the ACV features on that graph. That has not been declared yet and maybe the reason behind this.
And finally, will we see a CR given the low cash balance? Ian has again made mention of ‘continued self-funding organic growth’. I personally applaud him for the fiscal discipline applied over 3 years.
I was looking out for the R&D Rebate in the Cash Flow summary. I maybe wrong here, but looks like they opted for the Tax offset option. What does that tell us in terms of the need for Cash?
Keenly await the HY results.
Rokewa
(20min delay)