Ann: SWF 1H FY2023 Half Year Results Presentation, page-10

"Would love to know what active traders looks like, how many customer have placed trades in the last 30, 60, 90 days because that's the real barometer on how they're traveling."

In that case, they'd not be reporting Active Users in a way that reflects market share, but a way that reflects current market conditions.

"I'm perplexed at the cheering for minuscule NPAT that's been driven by interest earnings from customer money which they have no control over."

The NPAT is less minuscule after adjusting for the write-offs of dev expenses (crypto, HK). We also knew that RBA would be raising 6 months before they started doing so. SWF was in a tough position when RBA cut to 0.1%, leaving us with years to prepare and position ourselves for when they started to raise. So it's still partially attributable to management, even if it was RBA's decision - they had years to keep the business financially sound with lower interest revenue, and having to attempt to keep client cash balances high. But I'm not sure if the current CEO can take credit for that positioning - Andrew Ward or Rob Edgley from the prior years?


We had headaches through early COVID - customer complaints about long delays to sign up, then Edgley-Chairman/interim-CEO hired lots, finally fixed up the problem after some months (or lost potential), then business was booming!, until the failed app outsourcing and then an expensive rebranding, new competitors undercutting, then in late COVID we have shareholders complaining (me included) about outsized staff/marketing. It's a bit hard to balance it all for them, as being just 6 months too late can appear to be bad management eg. $1m marketing for 2000 sign-ups, but possibly that is due to 1 year contracts that they can't easily adjust.


I'm not entirely bullish, but try to add some depth/background to the answers. Eg. I have mentioned the marketing budget lately as inefficient, and the staff budget as suiting the covid peak - as I believe that with RBA rates where they are currently, the cashflow should be coming in quicker than it is (costs not well under control - though the HY report mentioning improving future cost control). But I also expect positive cashflow of up to $1m this quarter, which is fairly positive to me. And I also consider the competitive environment to be tough, but Stake is taking a high amount of the 'budget' segment, and taking less of the 'medium' segment.

IPOs is an interesting one, as any incremental revenue almost flows straight through to cashflow (if staff costs are under control). The ETF was a disappointment in this way - high expectations of revenue, but little delivered. But IPOs I imagine would have less associated costs than the ETF, so a less risky bet.

If I am right about positive cashflow of up to $1m this Q (due to apparent cost control improvements - see glassdoor), it would put us on a PE of about 10, and PE-EV (adjusting for cash in bank) of 7.5. That's sort of a high case, since I said 'up to', but it shows that the market cap is fairly low. We don't deserve a high PE when active users grew <10% YoY and with tough competition, but 7.5-10 is still cheap. We're in a far better position than say a company with debt to pay off.

Our problem is what to do with the $10m. Spend it on staff etc and risk wasting it again (crypto, HK)? Up the marketing budget to try to gain market share? (No! Not right now.) Save it for later? Start paying dividends and risk a raising 2-3 years down the track if RBA cut and costs weren't under control? A buy-back? (This one actually sounds quite good, if there aren't any low hanging fruit projects to invest in.)

I think Datt feels somewhat similar to me, that there's good potential here, eg. improving revenue sources. But I'm not sure if a buy-back would even come across as ethical after Datt was just accumulating, and only recently joined the board. But logically, it could be a good option if the current market cap is undervalued and cashflows are coming in regularly, with no high-priority projects demanding investment.