Ann: Quarterly Update, page-70

This was a disappointing quarter, no need to sugar-coat because it's clear to all. ARR up 1% to $4.94m had me shaking my head on first read. Reporting ARR up to $5.2m as of 2nd week January was a damage control ploy.

I've said it before but execution against their 2019 roadmap was well off the mark. Cash flow break even in the near term - no. Deliver robust revenue growth - no. Return of advertising revenue - a token $18k this quarter.

I feel CY2019 was a learning experience for management. Their strategy was confused (an unwillingness to go hard at rapid growth but not achieving cash flow positive operations either). There was a heavy reliance on three "landmark" contracts, which haven't gone to plan.

Positives from Q2 result

MyHealth1st easy referrals - GP to specialist referral process launched. If you've ever needed to see a specialist you know how painful the appointment process can be. This service has great potential and solves a real problem. Backed by Shexie supporting some 3,500 specialists. Site growth should accelerate in 2H FY20.

Cash receipts - up to 1,293 despite more delays in the Benestar project. Highlights a reasonable level of on-boarding over the last quarter.

Net cash and cash position - 2nd consecutive quarter of reduced operating cash with $4.4m cash on hand.

Cult like following from John Plummer - continued support to extend facility amount to $3m on favourable terms. 450k still currently undrawn.

What I would like to see from 1ST going forward2020 roadmap - one that reflects learnings from 2019. It should present a clear narrative and strategy for CY2020. The strategy should be supported with information on major contracts, sales/marketing aims and a current and forecasted pipeline. It should include an ARR target/goal (the key metric for SAAS businesses).

Cash flows - don't talk about 'core' cashflow positive as a backdoor to not achieving your 2019 aspiration. Don't confuse your shareholders (this goes back to having a clear strategy). Investors want to see strong underlying growth with sound financial management. Do this and cash flows will be in a good space.

Improved sales - diversified contract wins and less eggs in the one basket with the current three major contacts.

A focus on implementation - transparency around on-boarding timeframes, making the user experience as good as it can be.


Disclosure: I have not sold a single share and am happy to hold until Q4 results.