Been watching this one from the sidelines for a few months, including the previous pump for the last capital raise.
While today was a good update and I am not surprised that HotCopper is jumping up and down about it, especially as daytraders will no doubt want to push it higher Monday, before dumping as they exit before Tuesday and T+3 starts kicking in (it has happened before on previous spikes here!!), a serious question about the announcement.
The customers and ARR being added is great, but aren't the large majority of these coming across from the Odotech acquisition?
The announcements mentions this as well, but blends them into other sales in Table 1 and provides no breakdown to the market about which are new wins and which Odotech customers they have renewed on the new ARR model.
The timing for this makes sense as well, given that the Odotech acquisition closed on 21 Dec 2017, so when Dec 2018 rolled around, there was obviously a bunch of contracts that needed renewal and conversion across to Envirosuite software and added to the ARR.
If you look back at the acquisition announcement, Odotech had about $4.5m and Envirosuite had $1.5m, which interestingly adds up nicely to $6m, so it was probably always going to be relatively easy for them the reach their target this year with a decent conversion of Odotech customers, it was just dressed up for the market as this stretch target for the FY when management knew it was going to happen.
My bigger question is are they really adding many new customers to their revenue at all, or is it simply a conversion to the Envirosuite software and recognition in the ARR?
They also note in the announcement that more customers are to be converted prior to 30 June obviously as their old Odotech contracts run out.
Now its great they are converting them, but that is also what they paid for as part of the acquisition, so I am not sure they should dress it up differently to that, it should be the bare minimum expected when you have spent shareholder funds on the purchase.
Have we seen any churn rates from Odotech customers? They had 70+ customers, how many have been converted?
How many of the customers in Table 1 are new customers?
Assuming the $6m is in the bag, its the jump from $6m to $12m that concerns me, how are they going to get anywhere near that when they have to rely on signing new customers for ALL of that additional revenue?
Anyway, points I thought that were valid and worth raising, especially as we have seen some small caps burn a lot of investors in the last few years with announcements that are rosy, but don't necessarily give the full picture.
Would welcome any feedback on this, as I am not a holder and don't follow it that closely.
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