Ross Barrows' note is very interesting to me as I have been analysing NEA along thesame lines. To add to Ross's comments by looking forward to FY20, I expect thefollowing:
- ANZ revenue to increase from $53M in FY19 to around $65M in FY20 (+22.6%), taking into account the increase in sales and marketing FTE by 19% and an expectation of further improvement in the STCR.
- ANZ capture costs to remain stable in FY20 at $3.9M. My reasoning for this assumption is that the wider use of HyperCamera2 will result in greater efficiencies by allowing higher and faster capture. This will enable NEA to capture more areas with greater frequency of capture without increasing costs.
- So, ANZ capture costs as a percentage of ANZ revenue for FY20 is estimated to be only 6%. IMO, this shows that the recent accounting changes to capture cost amortisation is already almost a non-issue for the Australian operation.
- As the NA operation is growing much faster than the ANZ operation did at the same stage, it will not be many years before capture costs in NA are dwarfed by revenue. For FY20, I expect NA revenue to be at least $40M (noting the 67% FTE increase there from 33 to 55), with capture costs of around $19M, allowing for higher costs of Canadian capture for the full year with wider and higher frequency coverage balanced against HyperCamera2 efficiencies. NA capture costs will rapidly fall as a percentage of NA revenue. Higher amortisation rates will quickly become less important.
