VFX

0.00%

0.6¢ visionflex group limited

Another great post TEP! What concerns me however is that 1ST...

First 2 Last

Share
Profile

Follow
Malcolm1209

316 Posts.

66

27/01/20

12:44

Post #: 42586265
Share

Originally posted by T.E.P.: ↑

What is the single most important metric for a subscription/SaaS business?

It used to be easy to focus in on the key metric for a business. It was sales.

Every month or quarter the cumulative view of all products or services sold was generally the first and most important number you would focus on. It was all fairly simple and sales/revenues/cash were in many ways interchangeable. But over the last ten years, an ever-increasing percentage of the economy has become based on a subscription-based model. You no longer buy the product or service; instead, you buy the right to use it for a period of time.

Take Netflix as an example. Prior to Netflix, customers purchased movies and TV box sets from a store. That store could then easily measure its sales and revenues at the end of every period. But Netflix charges $X per month for access to its whole library of content. The company can only recognize revenue once a service has been delivered so it can only add $X per subscriber per month onto its overall revenue number every month.

So actual revenues present an incomplete picture. It's clearly important for accounting purposes, but it's not the best and most forward-looking indicator for the health of the business. The introduction of MRR (monthly recurring revenue) and ARR (annual recurring revenues) addresses this issue.

ARR is the single most important metric for SaaS business because SaaS companies largely rely on future revenue. In more traditional business models, the majority of revenue is collected at the time of purchase, and retention (or repurchase rate, for e-commerce companies) makes up only a small percentage of revenue. For SaaS companies, revenue is distributed more evenly across an extended period of time.

Revenue is, by definition, backwards facing and, in the case of SaaS, it does not even do a good job of describing the past because of the waterfall nature of how subscription revenue is recognized. ARR, on the other hand, describes the present. It is a metric at a point in time. Just like the cash on the balance sheet is a number tied to a date, ARR is a number that describes the current scale of the business.

ARR is a simple and beautiful metric because it is easy to understand and provides a clear sense of scale. It is the number 1 metric that I will be evaluating 1ST Group's progress on in the quarters and years ahead.
T.E.P.

Expand

Another great post TEP! What concerns me however is that 1ST seem to be focused on cash flow breakeven. The best fast growing SAAS companies invest for growth burn cash for as long as they can. In fact they are rewarded for investing to accelerate their growth and raising capital to go harder at it. There are a lot of ASX companies that highlight this. I feel like management and the board of 1st might be being too conservative given the platform they are building and the obvious excellent SAAS metrics they keep reporting. Would you have a view on what is behind this at 1st?

1ST Price at posting: 7.5¢ Sentiment: Buy Disclosure: Held
3 Upvote

0 Great analysis

Reply

Top Stories

MKT

The ASX can overlook its Telecomm small-caps. Here’s one diversified brand with an international footprint

IMA

Issues emerging as Australian companies tackle critical minerals challenge

RAG

Ragnar impressed by 11.55 metre pegmatite in Sweden, anticipating further mineralisation

CXU

Cauldron Energy reports "excellent" uranium assays in latest drill run

TIG

Tigers Realm's US$49M sale of Russian assets – to a Kremlin-adjacent billionaire – set to go ahead

NWH

NRW Holdings inks $109M deal with BHP for works at Jimblebar

A3D

Defence MOU for propulsion systems pushes Aurora Lab shares higher

Week 41 Wrap: HotCopper asks “Back to Mongolia?” for Elixir; US CPI comes in at 2.4%; eyes still on China

SHN

Sunshine Metals kicks off copper gold drilling at Truncheon; Highway East targets

ASX Market Open: ASX200 to open flattish after Wall Street weakens on hot US inflation data | October 11, 2024

There are more pages in this discussion • 15 more messages in this thread...

First 2 Last

Add VFX (ASX) to my watchlist

(20min delay)
Last 0.6¢		Change 0.000(0.00%)		Mkt cap ! $17.50M

Open	High	Low	Value	Volume
0.6¢	0.6¢	0.6¢	$12K	2M

Buyers (Bids)

No.	Vol.	Price($)
5	5950000	0.5¢

Sellers (Offers)

Price($)	Vol.	No.
0.6¢	2242622	2

View Market Depth

No.	Vol.	Price($)
5	5950000	0.005
9	10483043	0.004
8	4206669	0.003
2	950000	0.002
2	1200000	0.001

Price($)	Vol.	No.
0.006	2242622	2
0.007	5525075	2
0.008	2843079	2
0.009	1116500	3
0.018	50000	1

Last trade - 12.10pm 11/10/2024 (20 minute delay)

VFX (ASX) Chart

Another great post TEP! What concerns me however is that 1ST...

The ASX can overlook its Telecomm small-caps. Here’s one diversified brand with an international footprint

Issues emerging as Australian companies tackle critical minerals challenge

Ragnar impressed by 11.55 metre pegmatite in Sweden, anticipating further mineralisation

Cauldron Energy reports "excellent" uranium assays in latest drill run

Tigers Realm's US$49M sale of Russian assets – to a Kremlin-adjacent billionaire – set to go ahead

NRW Holdings inks $109M deal with BHP for works at Jimblebar

Defence MOU for propulsion systems pushes Aurora Lab shares higher

Week 41 Wrap: HotCopper asks “Back to Mongolia?” for Elixir; US CPI comes in at 2.4%; eyes still on China

Sunshine Metals kicks off copper gold drilling at Truncheon; Highway East targets

ASX Market Open: ASX200 to open flattish after Wall Street weakens on hot US inflation data | October 11, 2024

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News

Another great post TEP! What concerns me however is that 1ST...

Top Stories

The ASX can overlook its Telecomm small-caps. Here’s one diversified brand with an international footprint

Issues emerging as Australian companies tackle critical minerals challenge

Ragnar impressed by 11.55 metre pegmatite in Sweden, anticipating further mineralisation

Cauldron Energy reports "excellent" uranium assays in latest drill run

Tigers Realm's US$49M sale of Russian assets – to a Kremlin-adjacent billionaire – set to go ahead

NRW Holdings inks $109M deal with BHP for works at Jimblebar

Defence MOU for propulsion systems pushes Aurora Lab shares higher

Week 41 Wrap: HotCopper asks “Back to Mongolia?” for Elixir; US CPI comes in at 2.4%; eyes still on China

Sunshine Metals kicks off copper gold drilling at Truncheon; Highway East targets

ASX Market Open: ASX200 to open flattish after Wall Street weakens on hot US inflation data | October 11, 2024

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News