FCF is already positive at an operational level. Going forward, cash receipts are anticipated to run slightly higher than reported revenue.
You see, Aconex runs a very conservative balance sheet. Both the initial R&D costs for a new module like Cost, and the CAC for acquiring a big project like Mexico City International, are expensed upfront- in both these cases, the revenue streams are back-ended, with the income stream from the large project becoming a 90% annuity for the life of the project, and the revenue from the new module adding an entirely fresh income stream from both new and existing customers, in perpetuity.
In addition, the amount you see in the liabilities column under deferred revenue is actually operating cash. Why? Because Aconex generally records it's income quarterly (or annually) as it delivers the service.
However, some customers (and this has reduced greatly and is now mostly region-specific) pay their full subscription in advance. These advance funds are recorded as deferred revenue as the service has not yet been delivered. As the service is delivered, the revenue is recorded.
So, in other words, in this case, you have the cash and can spend it, but you just can't report it as revenue when you get it- but you do have to record it as a liability, just in case you had to refund it (a very remote possibility).
In FY16 deferred revenue was $89.7m, in FY17, it was $83m. That's a big wack of operating cash flow. While it should go down as a percentage of overall revenue, in pure dollar terms, as the business grows, it will undoubtedly increase.
Up front payments are region specific, because, in some places where Aconex has projects (Iraq, for example) it's good business to receive your subscription in advance.
Hope this helps.
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This post is based on my own research and is not investment advice. When making investment decisions, always DYOR.
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