Class business model

Class has been a perennial underperformer - Total shareholder return of 4% pa over the last 5 years.

The Re-imagination program has sparked renewed interest in the company - a string of acquisitions and a hugely increased R&D budget but I wonder if these expenditures are really being effectively converted to increased revenue and more importantly EPS.


Forecast EPS are consensus figures from Market Screener

2021 Product and Tech Investment of $18.1m on forecast 2021 revenue of $54m - huge.

But revenues are only forecast to grow 2021 $54m to 2022 $60.9m to 2023 $65.4m - only about 10% per year

Plus the acquisitions of
NowInfinity - 28 Jan 2020 - $25m - expected revenue $7m in FY20 - - no indication of revenue or EBITDA
Smartcorp - Aug 2020 - $4.2m adjusted for net assets - no indication of revenue or EBITDA
Reckon Docs - 1 March 2021 - $13m price - $5m of rev - EBITDA of $3m (2020 to Reckon)

2019 revenue was $38.3m, 2020 revenue was $44.1m, if NowInfinity was contributing $7m in FY20 the rest of the business did not grow and EPS fell between 2019 and 2020. OK integration costs will have contributed to this result but forecast EPS for 2021 of 6cps is well below 2019 EPS of 8cps.

Have been a long term holder am not convinced the strategy is delivering. The only real positive I see is the potential for Class Trust to really grow the size of the business and hopefully the EPS.

Thoughts anyone???