Thanks for sharing AussieBoy; There is a lot to be excited about...

Thanks for sharing AussieBoy;

There is a lot to be excited about here.

Firstly we know as a fact, based on consistent proof of concept conversion rates, that the upcoming quarter results will show record revenue and a record amount of schools contracted. As a long term share holder this is comforting to say the least.

Another huge factor that also brings me confidence is the decrease in data hosting costs Tim Levy is referring to which suggests scalability is very much achievable in a reasonable time frame without a blow up is costs:

“We’re a tech service, and the primary variable cost to our business is data hosting expenses,” he said.

“If you look at our business two years, that cost amount to around $4 per student. Now it’s $1.60 and we expect this time next year it will be under $1,” Levy said.

This is a substantial reduction; I remember communicating with Tim directly one year ago and he was telling me how this cost reduction was an important goal they where focusing on that would allow the business to progress.
This will free up lots of money to be spent in more ambitious areas like research and development and recruitment.

I also find it exciting that Tim has made it clear here that a large part of the rationale for the cap raising was in anticipation of some of these state-wide deals that they have been invited to tender for:

The other core rationale is that off the back of its rapid growth, FZO has been invited to tender for some “massive deals”, Levy said.

“These are state-wide deals million-student type deals and having humble balance sheet could put them at risk. So when we explained that to our investors they immediately got right behind us.”

This might have been mentioned vaguely in recent investor presentations but this specific motive for raising money was not explicitly described.

I originally questioned the timing of the cap raise,

as with all the positive momentum FZO had, I thought they would be able raise at much higher prices in the near future. Although now it makes sense, for as Tim has suggested here, a strong balance sheet will increase their chances of winning these contracts.

With all this in mind I think there is good reason to believe that FZO is very confidently anticipating being awarded these contracts and have taken important steps to be prepared to service them.

All in all, when I factor in all this upcoming growth, in addition to the likely success of their business to consumer offering via schools, I’ve never been this excited about the prospects of this company !