Return to Growth, page-26

I’ve just been going over Paul Koppelman’s recent presentation (below, in part) and noted the following points:

1. $15.4 million invested in new product (up 52% YoY) with $35.7m in total R&D spend, is absolutely stunning and shows a company fully committed to staying ahead of the pack.
2. $7.2 million invested in capex related to business growth- office fit outs and IT hardware, points to a company expanding its reach with new offices and also, most probably upgrading servers to cope with the increased demand for the backing up of data (being hot on security, Aconex backs up its data on servers worldwide)
3.    Up front invoicing decreased in FY17, as a percentage of overall cash receipts, to 21%, but was still $35.28 million (my calculation). This is a portion of ACX’s deferred revenue and has got to help with working capital.
4. Even if revenue only grew at the midpoint of 17% in FY18 and the up-front invoicing fell to 20%, it would still provide an additional boost of $41.27m in extra operating cash flow in the form of deferred revenue.
5. At 17% revenue growth, you’d expect total FY18 deferred revenue to hit $97.11million (up from $83m in FY17) which is a good wack of working capital.
6. Integration costs related to Conject end, also resulting in better cash flows.
7. Bottom line free cash flow becomes positive.

This all points to a company with great cash-flow streams, that is expanding rapidly.

Part of Paul Koppelman's presentation:

Total cash balance at 30 June 2017 was $33.9 million, including $2.9 million of restricted cash. This is an $18.6 million reduction on the prior corresponding period’s cash balance of $52.5 million.

Several investment activities impacted the results, including the one-off costs relating to the acquisition, restructure and integration of the Conject business, totalling $7.9 million and net cash outlays of $1.4 million relating to business acquisition.

A 52% increase in product investment from $9.2 million to $15.4 million year-over-year also occurred.

$7.2 million of capex related to business growth. This included new office fitouts, IT hardware and other improvements to support the growth of the business.

This is at a high point of the investment cycle and will come down.

Next financial year we expect cash flows to be positive because of higher EBITDA, lower one-time cash outlays and an increase in deferred revenue.

A breakdown of the Company's invoicing profile over the past five years shows an unwind of the upfront cash received which was a funding source prior to listing.

The current operating cash flow result includes the impact of a reduced level of upfront invoicing, which fell from 24% in FY16 to 21% in FY17.

This should stabilise just below 20%, therefore as the business grows in future, the absolute dollars of deferred revenue will increase again, assisting working capital management.

Gross cash receipts from customers were $168 million, up 35% on the prior corresponding period’s number of $124.5 million, broadly in line with revenue growth. As a percentage of revenue, gross cash receipts were 104%.

Cash collections have been higher than revenue and are forecast to remain that way.

https://hotcopper.com.au/threads/an...script.3644271/?post_id=26825703#.Wa-9Zcig-Uk




CBD South station, a part of the new $11bn Lend Lease, John Holland Melbourne Metro project- both Aconex enterprise partners who build their projects on Aconex.

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