Investor webcast recording - Q2 FY2023, page-2

For all the discussion and ruminating about one quarter's performance (in my 60-odd business days is a somewhat arbitrary, and ridiculously short, time frame over which to assess true business performance), if I was pressed to cite what I thought was the most pertinent thing to come out of today's presentation and Q&A session, it would be the unambiguous confirmation that the cost base of the business is currently appropriate.

For context, the past four quarters have seen Cash Expenses as follows:

MQ22 = $10.7m
JQ22 = $10.0m
SQ22 = 10.3m
DQ22 = $10.6m

So, pretty much flat-lining over the past few quarters and now we have confirmation that this is unlikely to need to flex upwards.

Why this is important is because it heralds the thing that has been missing from this stock, namely the opening of the Revenue-Cost jaws.

I suspect that the market - impatient beast that it is - has failed to appreciate just how much cost investment needs to go into not just winning customers, but also on-boarding them once ALC gets the green light, and the extent to which a large part of that cost hump is now behind the company.  

It's been a number of years of strong Revenue growth, but with Costs simply following Revenue up in a linear fashion.

Evidence of the Revenue-Cost jaws finally opening in the next few quarters is almost certain to be the long-waited catalyst for the share price, in my view.

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