Ann: Resignation of CFO, page-10

I think there are two bits I don't quite agree with here:

Firstly- I don't agree the software capitalization is significant. If you look at the difference between FY22 capitalised costs and the depreciation on the existing capitalised costs, they've only added a few m to the balance sheet.

"Jaw dropping binge on costs in FY23" - if you look at the investor presentation/transcript then all of the headcount costs have actually been added across FY22 - there's only a 4% rise in headcount coming (but of course as all these people were hired during FY22- their full OpEx impact only appears in FY23. What management have done is hired as if the FY21 growth was going to be sustained during FY22 and onwards.


This turned out to be wrong- but at the point this became apparent - you then have the choice of either cutting back all that extra headcount, or taking the cash hit and letting the business grow to catch up. I imagine management have decided its less disruptive to do the latter rather than try and cut back on all the people they've hired only 6-12 months ago (though I am surprised they haven't pulled back hiring on the 46 vacancies mentioned above). I don't have a firm view on whether this is wise or not- but doesn't seem unreasonable.

As far as I can see the only real OpEx growth we're going to see this FY is the spending on brand- which I don't think is a bad idea.

I think we can get too caught up in the OpEx side though. What's ultimately going to drive long term value is whether they can get back to 20%+ top line growth. I'm reasonably confident that what we're seeing here is a short term blip that's common to a huge number of Ecommerce companies (see Wayfair, Shopify etc), rather than a growth engine that's run out of steam.