Reasons for stalled growth

I (still) like Pointerra as a pure tech business offering a globally applicable, high quality B2B solution to multiple industries. I'm already significantly invested (and down), but recognize that if growth eventually arrives then today's prices are bargain level.

But I'm now looking for revenue growth. 3DP still call themselves a "high growth" company but ... they are not.





When I plot the revenue and receipts there's obviously a "step change", to use the company's preferred phrasing, after June 2022. But it was a step change DOWN. We can assume this is driven by the Fed interest rate hikes which reduced expenditure everywhere...



So 2023 was clearly worse than 2022. We can see that the receipts were terrible in 23Q4, and receivables at end of June 23 were lower than receivables at the end of June 22. Everything kind of went to crap around the end of 2022. We collected significantly more in customer receipts than we invoiced.

What does this mean?

• Our "contracts" are not meaningful. As I have been saying for years now, this is clearly a pay-as-you-go platform like all SaaS systems. If clients want to stop spending, they'll scale back or stop using the tool, and then won't be incurring expenses.
• Revenue grew 2H vs 1H. It has in each of the past 4 years, so you'd be very worried if it didn't "bounce back" somewhat from the very disappointing 23H1, but ... at least it did bounce back, somewhat
• The macro climate took 22% of our revenue. Assuming the business was growing, it took even more (from an expected ~50% growth to a ~20% drop is more like a 50% revenue impact).
• It's very difficult to gauge the revenue hit due to macro. This is not simply lagged payments - this is clients not using the platform. Is this a reasonable drop due to the economic climate? What does it say for the "stickiness" of the tool if clients are willing to drop it like a hot potato? Is it really going to be an essential part of the workflow?

I'm struggling to commit to further investment right now. The upside is larger than the down - I mean, best case is much higher than 20c. But I can't shake the concern that the slowed revenue is due to more than just macro, i.e. the platform is not fundamentally essential. If it's saving money for customers then why are they cutting their use? If it's necessary for their operations, i.e. they switch to using it, then how can they reduce usage to save money?

Unfortunately the quarterly won't necessarily report on revenue. The lag in receipts make it a less useful indicator. I will be waiting for the half yearly accounts in March for confirmation of resumed growth. Unfortunately the business needs to operate at much larger scale to see profitability.