thanks for that pchu. I will put that down on list of things to regularly monitor however it is not something I intend to worry about at this stage. We have months before the SME platform is launched and I keep reminding myself that VPC have brought Leanne Graham on board and that in 3 years she took XRO from 4,000 clients to a client base of 120,000. As Russell is on record as saying "We are doing it the Leanne way". We have to trust that she knows what she is doing in regards to SME client signing.
What is currently occupying my attention is the signing of new enterprise clients. I do believe that 2 to 3 months may be required for the BDMs to really get things rolling. Well we are at the 2 month mark now so I am hoping for and expecting a trickle of new signings to commence at any time which should become a steady flow in the coming weeks and months. They really need to keep things ticking along slowly but constantly if they hope to reach break even before the cash in the kitty runs out. I thank God a couple of times a day for that revenue generator that is Dash Digital. Between Dash and what SaaS and PPV fees they are already collecting they have about half the yearly cash burn covered.......but from here on in the other half is going to have to be covered by future SaaS and PPV fees. If VPC can make (say) 10 grand a year from an enterprise client on average, that is working on the assumption that they sign the odd AHG or Alcoa in with the mix along with a bulk of smaller enterprise clients, then it will take 40 new enterprise clients to cover the cash burn of one of the remaining 6 months still to be covered. Thankfully we have the SME market to look forward to and this should do some of the heavy lifting. SME price plans work out at $600, $1,800 and $4,200 p. a. I have no way of knowing which package will be the most popular or what the average will be for the sake of the back of my envelop calc if I work on an averaged SME client paying $2,000 p a. then we would need 200 clients to cover one month cash burn. Fortunately there are a lot of SMEs out there so this should not be an insurmountable task but the trick will be to get enough clients in time before the cash runs out. I think in order for this to happen VPC need to be firing on all cylinders and not leaving it to either the SMEs or the Enterprise clients to do the lifting.
This is a tall order but one I think is very doable provided we start seeing a constant trickle of new enterprise signings starting very soon. In contrast I shudder when I think of VPCs SaaS peers on the ASX. Their valuations are multiples, in some cases many multiples, of VPC but from what I can see VPC has by far the most healthy cash burn/revenue ratio out of the current crop of SaaS start ups....thanks largely to Dash Digital. With the ending of the age of the unicorn and the dawning of the age of the cockroach this is exactly what you would want. I look at 1PG with its 400 mill valuation and I get a cold chill. Yes they do have 40 mill in cash and at current cash burn rate that will last 10 quarters so they have breathing room. But the last qrtly shows receipts of a paltry 75k. In their commentary there is some vague and mysterious reference to 4.2 million of new bookings. But even if all 100% of this gunna doo money turns into actual real money then they are still only making enough to cover one quarter per year....and if some or all of the gunna doo money gets carried away by the unicorns now making their final journey to middle earth then....????? brrrrr. Don't even get me started on stocks like ISX with its $250 mill market cap and zero revenue. They are a company with zero income but with an idea that is supposed to be worth a quarter of a billion dollars.
Sorry to ramble but there are a lot of ideas in my head that need expression and there are comparisons that need to be made. So in conclusion I am very keen to see some new enterprise clients starting to trickle in very soon and I'm not too fussed at this point about the lack of interest in the SME price list on the website.......but will monitor that one for future reference. The weeks pass quickly and before we know it pchu's observations will be worthy of even greater consideration.
