Business Model Struggling, page-9

Hoofa, I can see you've made a few posts over the past few weeks, outlining your concerns. Whilst I do appreciate other viewpoints, I believe some of your assumptions as largely alluded to by 5hareholder do seem to be somewhat misguided. The expansion in staff driven primarily by the the Asian growth strategy can be seen by the number of Job adverts up on their website, with a couple new ones added in the last week, and a Technical consultant role in Manila recently filled (advert removed last week).

https://www.jcurvesolutions.com/careers/

One would expect that these additional costs will provide the foundation for a further uptick in revenue, without this assumption there would be no point in hiring all these people. It's only reasonable to incur the cost upfront and the revenue to follow behind. As this expansion in FTEs and establishment in Asia is still in it's infancy, hopefully once the dust settles we'll know a bit more later this year. This was shown by the particularly wide guidance (given $12.5-15.5m, see slide 27 in the AGM report).

https://wcsecure.weblink.com.au/pdf/JCS/02174356.pdf

With half year results due in approx a month's time, (Mid Feb), whilst me might not see it in the numbers, will hopefully get some clarity as to how this is working in practice and how the rest of the year is shaping up. Also, the note accompanying the guidance would suggest we are due an announcement at some point regarding strategy, Riyo, Spectrum etc or perhaps an acquisition - "A large range reflects the uncertainty surrounding a number of larger Enterprise opportunities currently being worked through across the businesses strategic growth areas". The webinar also had some discussion/questions on acquisitions and Canning seemed fairly receptive to activity in this area

Also, mentioned in one of the above posts was the number of shops offering Netsuite, and how JCS may have missed the boat/has no competitive advantage. I'd disagree, JCS's advantage comes in the form of the number of implementations, the ease at which this is done, and the proven track record. Any further product differentiation's that can be provided (Riyo, & JCS scaled back version of Netsuite for small business) further differentiates from peers. JCS appear to do a pretty good job in broadcasting there, with blog updates, attendance at tech conferences, webinars and case studies. They offer new business referral bonuses, which means they likely get a chunk of new business from existing customers which is a positive sign too.

Much like any tech company the ability to succeed and grow is to keep users on your platform/ecosystem. added tools like Riyo should hopefully help support this and grow ARPU, which again the likes of Riyo have the potential to deliver. The ARR (slide 11 in the recent AGM presentation) shows the stickiness of revenue over the course of implementation. It's worth noting that the ARR in some years of origin (2015 year) have grown as the customers have purchased additional licenses. Hopefully this is a growing trend as JCS offer further potential for cross sell opportunities.

Additional and perhaps overlooked are small one off payments/outgoing for the likes of the E-Commerce connector ($100k). These have the ability to subtly reduce fees/outgoings and 3rd party support dependencies. I'm sure JCS will be reviewing all outgoings and sizing up additional opportunities to streamline costs and maximise margins.

Lastly, and by no means is this investment advice, more how I review my open holdings. It is definitely worth taking time to see why I'm still holding a stock and whether my view of fundamentals and of the a companies direction match my investment appetite. If I struggle to find anything positive in a company that I hold for the time-frame I'm holding, then I will consider cutting my losses and moving on.

Personally I continue to hold JCS, as for me quality of management is one of the biggest factors in ongoing success of an operation. I view the current management team and board, and corresponding company culture to be the right mix to potentially have a crack and take JCS to the next level. Whilst things appear to have been a bit slower than expected, I think/hope we'll see some some good work over the next 6mths that show green shoots in their key growth pillars. As such I've taken the recent lows as an opportunity to average down, a market Cap of only $8m now, seems pretty cheap IMO.


all IMO, DYOR etc...

GLTA for a prosperous 2020..!