@Wini I desperately want to maintain your optimism around the higher margin Fed Gov clients but something is a miss with the pipeline over time, @September there are 2k less users in the onboarding phase than June but that hasn't translated to an increase in Live active users....exactly where did these users go? As someone who works in a government owned corporation I understand it can be a slow burn but this lack of traction over the last 6 months is something else.

@rmoss @Wini I tend to agree. I wouldn't be quite so phased if they were losing low margin customers, but if that is the case, wouldn't you indicate as much in the release? Alternatively, it might be continued maintenance being done by government customers who don't regularly keep accurate records of users (there might be historical users recorded still, despite them being long gone). Either way, we are left guessing. Unless I am missing it, did they also fail to report government ARPU, something they would typically highlight?

On a positive note, two cash flow positive quarters in a row, even if the numbers were practically irrelevant (1k and 3k!). Another positive, we finally saw a reduction in admin and corporate costs after steady increases for the better part of a year.

Further, even with users going backwards for a few quarters, we are still seeing total ARPU gradually increase, critical to my thesis:

AusTender shows there were a few contracts published from ongoing customers in Q1 i.e. 210k from the Commonwealth DPP and 385k from Veterans' Affairs. Nothing of any real significance for the start of Q2 though, which possibly doesn't bode well. All it takes is another subpar quarter for the company to return to negative cash flow and dip into the financing facility. The market seems fed up with them so I can't imagine that would do wonders for a share price that I think is already quite attractive/cheap. On the other side of the equation, we are left waiting on a bumper quarter to really boost cash holdings -- without that I think the share price remains around current levels, so that is the bet here.

@Strawman I enjoyed the chat we had with 8CO over a year ago. Would it be possible to tee up another? My first question would be around continued decline in users over the last two quarterly reports. But also just generally keen to see how they think they are tracking vs their language in recent releases.

Spot on @Rocket6 I don't see how the share price can move anywhere until there is some demonstration of operating leverage translating to cashflow and creating a decent buffer against access the debt facility or worse still a cap raise. Still a holder and no plans on changing anything yet but it sure is testing the patience

@rmoss I agree. The further lack of momentum on operating cashflow tends to validate my decision to sell in July, having held just under two years in a small position.

While the reducing costs offset the characteristically weaker 1Q for receipts, keeping Operating Cashflow flat (whereas it usually dips down again quite a bit in 1Q), $8CO doesn’t have the scale to “shrink to greatness.”

I had weighed up exiting in July with waiting for better news to reduce my capital loss, albeit on a tiny position. However, when I look at the progress of some of the businesses where that cash went and seeing the continued lack of momentum in today’s report, I still consider it a good decision.

Unless something fundamentally changes (I have no idea if it will), while I can see $8CO might become a sustainable business, I can’t how it will generate meaningful returns.

In retrospect, the thesis breaker was when the GovERP mandate was weakened. The progress of potential customers in the “hopper” has been quite anaemic ever since. Hindsight is wonderful, but that was the time to get out, but I was guilty of joining in the “maybe …” story.

And, as @Rocket6 has flagged, why drop the important Federal Government ARPU measure? It was provided in July. (From elsewhere in my portfolio this week, I well and truly over trying to analyse why management stop reporting something they’ve customarily provided.)

Disc. Not held in RL and SM

@Rocket6 in addition to dropping the reporting on Fed users, they also gave conflicting values for what their actual ARPU--> in the summary dot points they have it as $29.90 up 13% from previous quarter. While in the table and in the text they have it at $28.18 up 12% vs PCP. The previous quarter had it at $28.08 while the PCP was $25.26. Even using generous roundings I can't quite get a 12% increase from the PCP.

I've long had a suspicion that these guys don't have a great handle on how many users are on their platform, beyond a very high level. Given that the annual revenue per user changes quarterly there is also probably not much value in it as a longer term predictor. I'm not too bothered by this now as like you am I am just tracking total costs and reoccurring revenue. ARPU is really just a derivatives of total revenue it seems an easier thing to follow. I'm not too worried if we end up having more users who spend less or less users who spend more.

Hats off to them again though, they are still successfully skating along on the bones of there arse. Positive cashflow is positive cashflow though and it does look like a new level of spending discipline has been implemented.

I would have liked a bit more detail around the change fees, as at $500K it was a big driver of their positve cashflow for the quarter. I'm assuming this is one off revenue so seems a bit weird to highlight it.

The commentary around tender activity was very strong and it looks like some of the changes they implemented last year about changing when the milestone payments look to be paying off.

I am thinking the same as others, this is probably not going anywhere anytime soon, but it is making positive if slow movement. I am thinking about the opportunity cost of sitting in this one though.

I dumped all my 8CO.

It has just be frustrating watching it go down down down......I can't see it surging up any time soon....and I think there are other quality companies that are currently undervalued. So i'm throwing it all into PNV. Although in Strawman, I don't think I can buy anymore. But in real life I am buying PNV.