Very Soon Going up past 3.20, page-43

Speaking of funds investing into ARQ - very positive write-up in the August monthly report for the Blackrock Industrial Share fund

ARQ Group (-27%) (Formerly Melbourne IT) is a stock that we have written about often in these monthly updates, as it had been one of our better performing stocks in the portfolio. Unfortunately ARQ suffered a setback in its earnings outlook, due to a one of loss of a contract in its legacy business as outlined below. We view ARQ as turnaround story and believe the turnaround is still on track despite this setback. ARQ has two businesses. The first, the enterprise division provides mobile applications, data and analytics to large enterprises. Initially built by acquisition, this business achieved 39 percent organic revenue growth and 112 percent organic EBITDA growth in the first six months of calendar 2018. ARQ continues to win contracts with blue chip customers, most recently Bunnings and Pfizer and this year was named Amazon Web Services Innovation Partner for the Year for Asia Pacific

The second business, the SMB business, is the original domain name hosting business and operates under several brands including Melbourne It and Net Registry. This is a low growth business but with good cash flow generation. Within this business ARQ had a contract to provide wholesale domains to Telstra. It is part of the Big Pond email addresses Telstra provide their customers. The contract was renewed again on June 21st 2018, however Telstra has since decided to radically reduce their product range. ARQ do not expect the Telstra contract to run to term and have told the market to expect a reduction in EBITDA for ARQ by $4 million on an annualised basis (around 12% impact). It is important to note that the loss of the Telstra contact was not a competitive issue. There are no other contracts like this at ARQ. Crazy Domains, the main Australian competition to ARQ in the domain hosting business reported a strong result and an improvement in operating conditions. Within the SMB business, ARQ has a strategy of selling additional website building and search engine optimisation services to an installed base of 400,000 small and medium sized business clients. This business should help underpin profits in the SMB business over the medium term. ARQ have a new chair, Andrew Reitzer, who commenced on August 1 2018 and we will meet with him next month.

https://www.blackrock.com/au/indivi...d-industrial-share-fund-fund-update-en-au.pdf