North America ACV about to exceed ANZ, page-96

Thanks for sharing the work on your model. My comments are mainly about revenue and assumed growth rates.

Group Revenue: I have found that the best predictor of group revenue for any half year is to use 51.8% of the ACV at the end of the previous half-year. Over the last 4 half-years the actual % has been between 51.4% and 52.3%, so it is very consistent.

NA ACV: I think your assumed drop off for NA half-year growth rates is too pessimistic (from 26.5% to 14% in only 3 half-years). My reasons for saying this are:

• NEA is still at a very early stage in capturing the market in NA;
• NEA is very successfully targeting the 3 main growth verticals, providing timely data following major disasters, growing its coverage of the NA population, improving its AI offer;
• NEA is still publicly talking about accelerating growth in NA.

I therefore think that it is far more likely that NEA can at least achieve a much lower drop-off in NA growth rate for the next few years at least. I have assumed the rate drops off slowly but steadily from 26.8% in the last half year of FY21 to 20% per half-year by the end of FY24. There is also a reasonable possibility that they can achieve steady, or slightly increasing, growth rates over this period, but I prefer to be conservative in my model.

I agree with you and others that no-one is likely to be correct with their model. The value in doing this for me is that it clearly shows the likely magnitude of incremental growth as NA quickly becomes much larger. My model indicates that the incremental group revenue in FY24 is likely to be over $50M, compared with only $16.7M in FY21 (more than 3 times in only 3 years). This gives me confidence that gross profit will grow much faster than expenses.