Return to Growth

Finally have some time for a take on the results:

Growth

Return to stronger growth in H2FY17 as expected.

1. Top line growth for for FY17 at 36% on a constant currency basis ($163m), and 31% overall.
2. All regions experiencing good to exceptional growth, with strong 30% revenue growth in he US.
3. ANZ back up to 9% YoY, up from 6% in H1FY17
4. EA grew at 143.4% or 167.8% constant currency.
5. Overall, revenue has doubled over the last 2 years.
6. Very strong pipeline, with 75% visibility.
7. Enterprise agreements driving growth and profitability.
8. Operational FCF is positive.

Conject

1. Conject bedded down completely, with no more integration costs expected in FY18
2. All 620 customers retained, including large companies like Vinci and Mace.
3. Some customers still on the Conject platform, but gradually being switched over.
4. Conject functionality absorbed into the Aconex platform

New Modules being rolled out, providing value-add uplift and growth momentum.

1. Connected Cost- already has over 20 customers and is helping win new projects; an "evergreen solution"
2. Field- PDF forms added
3. Packages
4. Insights- leveraging insights off the extensive data base- huge potential.
5. Security- Fed Ramp in progress- a very big deal in the US.

Regions

1. ANZ- 36 new enterprise agreements inked in FY17( I only noted 2!)
2. Recently, some massive new projects won by John Holland and CIMIC.
3. Procore not an issue- has been tried before.
4. Americas- user based enterprise agreements (eg Bechtel, Flour, Exxon, AECOM) successfully ramping up.
5. Cited 2 very large wins- Mexico City Intenational (US$9.4bn) and the California High Speed Rail (US$68bn and running out to 2029).
6. EA- cited wins with Siemens, Vinci, etc, but did not mention the M25 win!
7. Asia- pleased with the penetration into Chinese gov't OBOR infrastructure projects. Hitachi and Sumitomo mentioned re project wins in Japan.

FY18 Outlook

1. Looks like the new CFO is bringing a disciplined focus on improving EBITDA margins and FCF.
2. Expect to be FCF positive and see EBITDA growth in FY18
3. Cash reserves at $33m currently but expect to see that grow in FY18.
4. R&D expenses expected to reduce to under 20%, post the Connected Cost launch and Conject functionality integration.
5. 15-19% compound revenue growth in FY18, returning to 20%plus thereafter- suggests revenue of $185.4m- to $191.8m in FY18.
6. Still retaining a big focus on S&M to seize the massive opportunity.
7. G&A at 16% costs coming down as a proportion of revenue.
8. Total debt static at $1m
9. Re the US$9.5T TAM, large mega projects ($1bn plus) at 21% of the TAM in 2014- up from 5% in 2004, with this number increasing quickly.
10. Future growth being driven largely by enterprise agreements, which are cost effective in terms of M&S and on-boarding, and "evergreen" solutions like Connected Cost and Field, where there is generally no churn.


US$9.4bn Mexico City Airport- phase 1 delivery, 2020.

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This post is based on my own research and is not investment advice. When making investment decisions, always DYOR.