The depressed share price has got me thinking a little bit, and I had a bit of a chance to reflect on the independent review that was done where LVT has come out with their 'premiership plan' and targets they want to achieve by start of 2024.
Namely:
- >10million licenses and having contracts with 50% of top 300 companies globally.
I just did a quick and dirty calc, and I'm quite frankly a little scared of being 'led down the garden path' again (as per the prior $100m ARR target). Now there is no release of metrics relating to cash receipt per license, or ARR per license. We do get in each quarterly ARR per customer (which is growing but this just depicts increase enterprise share / customers with more employees). We don't really get a feel for how the product price is being changed over time, which I envisage has a baseline that is then negotiated on a client to client basis depending on numerous factors. However as of EOFY21, I have inferred based of number of current licenses and known cash receipts/ARR what these look like at a per license level.
|
| 30-Jun-21 |
|---|
| 1 | Number of Licenses | 2,300,000 |
|---|
| 2 | Cash Receipts | $51,800,000 |
|---|
| 3 | Cash Receipt per license | $22.52 |
|---|
| 4 | ARR | $62,800,000 |
|---|
| 5 | ARR per license | $27.30 |
|---|
If we apply these same cash receipt and ARR per license rates out to the targeted 10million licenses, it would suggest that by the start of 2024 (if targets are met), that they may expect cash receipts/ARR >$200m.
|
| 2024 |
|---|
| 1 | Number of Licenses | 10,000,000 |
|---|
| 2 | Cash Receipts | $225,217,391 |
|---|
| 3 | ARR | $273,043,478 |
|---|
I imagine that deploying the Reach product would be cheaper than the core products so cash receipts/ARR would be lower than what I've tabulated above (as I've kept things constant), but are management being realistic with themselves when setting these targets, or is this just aspirational blue sky thinking?
Have little trust/faith the number of licenses/ no. companies quotes within top 300 will be contracted by 2024 given the number of large clients that they have secured in the past 1-2yrs.
Proof will be in the pudding.
(20min delay)