Ann: Quarterly Update, page-64

I will post some further thoughts later in the weekend.

At a high level however, my concerns remain that revenue is taking a very long time to turn into cash at bank and the companies priority metrics seem to have a habit of morphing over time at 1ST.

The market reaction to these results is not too surprising in my view.

@T.E.P. back in July 2019, I posted this: https://hotcopper.com.au/posts/39763018/single and asked, "In today's announcement they posted their Q418 ACV $1.33m yet 12 months later, the receipts in failed to even be that much. The receipts also include any advertising and usage income so likely more than the base contracted sum."


In June 2018, the company announced "ACV as at the end of Q4 FY18 of $4.3 million, an increase of $336k in new ACV for the quarter" My confusion and concern remains.

$4.3m on a quarterly basis (just dividing by four) is $1.075m.  After one year, I was very worried that this still wasn't hitting the books as receipts.  Backlog yes. But one whole year made no sense.  When I queried the company they assured me the backlog was no where near one year in length and was shrinking quickly so this made even less sense.

Now one and a half years later,the company is reporting just $906k subscription revenue for the entire quarter.   

If after 18 months the ACV hasn't hit the companies bank account, how long should shareholders wait for todays $6.1m reported ACV to hit the accounts.  Another 1.5 years, 2 years?

There is no question in my mind the platform is good and the product works.

The issue is, in the absence of become self funding and cash flow positive (which the company seems to be walking back on now) further dilution will be required.  When market caps are lower and growth is steady the market is more tolerant.  

Once the market cap of companies grow however, the market expects guidance to be met and growth to continue.  The higher valuation the higher the expectation and much less tolerance for missteps.