3DP (ASX) Receipts/ACV Inflection BOOM

Originally posted by Kfann: ↑

Hi all...(especially Zac and Kev91)

The ACV/Receipt conundrum?

Bottom line....the majority of any invoices will have highly irregular terms at the early stages of this coys revenue journey making any meaningful prediction of Receipts Vs Revenue Vs Deferred Revenue quite difficult.

Some of my 'observations' and 'guesses':

1) In the early days, 3DP probably gave out reduced terms to PH and others for invoice advances...a typical start-up tactic.
2) When PH was in trouble in the 2nd half of 2019, 3DP moved early to get paid ahead of invoices but once PH refinanced and 3DP did the Nov CR, the pressure came off and invoices would have returned to a more normal 30-60 days.
3) One of the deals that 3DP likely did with Accenture concerning PGE was for extended deferred terms. Who noticed that they emphasised that they had "...continued to invoice.." PGE before a formal agreement? I feel there may be A$250k+ 'banking' up at PGE already.
4) 3DP's ACV definition has had some irregularities. This time last year, they inferred that DPaaS was going to be one-off or semi regulary type work but they seem to have included most (all?) of this type of work in ACV. Do they 'annualise' single 3 or 6 months contracts on the expectation they will be rolled over? If they do...it has to be a 'very reasonable expectation'. But these are the types of issues that can make ACV quite volatile and something accountants are wary of.
5) Up until late last year (atleast), the majority of PoC trials were paid for, which would be seen in both Receipts and Revenue but not ACV. I suspect this may still be the case although with more cash in the till, 3DP will be more tempted to offer no-charge PoC trials in order to open doors and speed things up. If you do, say, 10 PoC trials/mth at $10k each, this can quickly add up.
6) I also watch the Deferred Revenue line. This is (mostly) the excess of Receipts (all work paid for) above Revenue (work completed). At June20, this was $811k (growing from $282k in June19) after the excess apparently grew at $615k. This infers that Defered Revenue 'lost' some $86k in the year....which happens and is an indirect indicator of possible contractual churn. At less than 11%...this is pretty bloody good.

7) Last Q's Receipts?.....Well... In the past when I've called IO, he has described the usual "end of Q scramble" to get invoices paid (receipts) with everyone chasing up clients....very typical of all cash starved, growing coys. But with BS's money in July, the pressure to turn the team from sales/R&D into collectors was off and no doubt payables have blown out a bit in the Sept Q and receipts naturally fell off. Just check out the incredibly low receivables for end June 20...only $60k. This shows that (in the past) they really worked hard at bringing in the cash...so there is little doubt they let some slide this last Q.

In summary, it'll be nearly impossible to second guess ACV, Receipts and Revenue with any meaningful accuracy for a while...maybe 12-18 months. In the interim....just follow Glutenfree's great trend analysis.

For me, its simply.....

Jan ACV = US$1.88m
April ACV = US$2.17m
July ACV = US$2.87m
Aug ACV = US$3.98m (BOOM month)
Sept ACV= US$4.93m

I've been in the VC/ECM game for more than 25 years and this is what we/they all aspire to achieve; and....this is actually better than NEA early stage ACV's.

Its that magical yet ellusive Inflective Lift-off Point.

That's a lift-off with plently of thrust!

Enjoy the ride....Cheers

Expand

Kfaan

A compelling perspective. Half year results (Feb 2021) and accompanying narrative likely to facilitate the establishment of some correlations / patterns, to serve as a more reliable basis going forward. In the interim, market will try poke holes in any news flow from a valuation perspective. This time will pass.

For now, all about ACV growth and the managed escalation of costs.

Rokewa

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(20min delay)
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