Yeah, agree @Slideup. Here are the notes I've just made from the announcement:

• An uninspiring YTD revenue growth of 4%.
• First bullet point states in proud bold font that “year-to-date sales order intake of $22.8m”. But that doesn’t seem strong given last year revenue was $30m and forecast FY25 revenue is targeted for 20% growth. That puts a lot of expectation on Q4 sales of around $14m, more than double Q3 sales.
• In the messaging there is lot of “it got delayed in Q3 and should happen in Q4”.
• H2 guidance of $18-21m. Given H1 revenue was $17m, that lowers Mal’s previous guidance (communicated by Mal only 2 months ago on 25/2) of FY25F $37-41m to now being $35-$38m (17-27% growth). Based on his past behaviour, I have to assume Mal will underachieve communicated targets again.
• My base case in my recent valuation assumed 20% growth to $36m for FY25. I’m already starting to think that’s overly optimistic.
• They have eventually converted the Telstra partnership into revenue, albeit small. $0.3m for deploying Aura Ai-X in a subsea cable. Not much, but a hopeful sign of potentially similar work with Telstra and other prospects.
• Detect and Illuminate were the strong performers in Q3, showing 18% and 17% growth respectively. That’s good news, especially the ongoing growth in Detect, which is where I believe most future growth will come from. Access sales declined, attributed to inventory build up by US distributor in pcp.

Agreed @Slideup - this can be summarised in two ways:

1. Plenty of potential that never seems to be realised; and
2. Plenty of overpromising and consistent underdelivering.

I once had fairly strong conviction in AVA and held them both here and in one of my real money portfolios. I even made money on them until around 6 months after they sold their services division (in October 2021) and everything started to go downhill from there. I have written here (under AVA) about why they sold that profitable division - mainly because of huge monetary incentives for their management and Board members at that time - in fact they extended the deadline twice - the deadline by which the services division had to be sold for the incentives to be payable, so it was clear that they were hell bent on getting that deal done at the time. That was of course pre-Mal, so different management, but some of the current directors were there at the time, and that wasn't their only cock-up.

Paying that small dividend in late 2023 was also a stupid move with the benefit of hindsight, as was paying out the majority of the proceeds of their services division sale back in October 2021 in management bonuses and incentives plus a large 13 cents/share special dividend in March 2022. That dividend was worth more than AVA's entire market capitalisation now.

For clarity: AVA Risk Group completed the sale of its Services division (Ava Global) on October 19, 2021. The sale price was US$46.4 million (A$63.1 million), with anticipated net cash proceeds of US$31.1 million (A$42.4 million) after closing adjustments, and payment of management incentives and FY2021 accrued bonuses. The management incentives were included in the sale price, meaning a portion of the proceeds was used to reward management for their contributions to the Services division. They then paid an unfranked 13 cps special div on March 10th 2022. They then paid a 0.17¢ ($0.0017) per share unfranked dividend on December 15th 2023 when they clearly needed the cash to reinvest into growing their business.

Look at the differences between before they sold AVA Global, their services division in late 2021 (left side of purple line) and after they sold it (right side of purple line):

I really hoped that things would change under Mal Maginnis, but it seems they are still overpromising and underdelivering, and there is still plenty of potential being highlighted, but they just never seem to execute on that potential.

And a huge part of that is due to very poor capital allocation decisions by AVA management, including selling off their most profitable division and then NOT reinvesting that money back into the business.

So - no, I don't hold, and haven't held AVA for years, due to poor management.

man, the timing!

Agreed with the sentiments @Slideup @DrPete . And i can't fault your sceptisim @Bear77

Is Ava guilty of hyped-up rhetoric to support the share price (not a strategy that you could say has been effective), or is this simply a case of genuine expectations slipping largely due to external factors? Working with large customers can be painfully slow, and all the current macro/trade uncertainty probably has many holding off on new orders.

I want to believe it is the latter, but it'd help if communication from management were a little more frank with things.

Q4 really is make or break for me -- not just in terms of delivering the numbers to support the strategy, but more importantly in building confidence in management’s credibility. Execution matters, but so does trust.

Here is the journey over the last 6 months on FY25 sales expectations/guidance/wild stab in the dark:

AGM (31/10/24): 37.7 - 45.2m

H1 Pres (25/2/25): 37.0 - 40.7m

Today (30/4/25): 35.0 - 38.0m

Not that Mal even had the decency to call out today as a downgrade or what the full year number was! Like we not going to add two numbers together.

Mal is really giving me the S#&T's. I get his enthusiasm on joining and that what he hoped would happen took longer or didn't - but call it for what it is for god sake A MISS

Disc: not a happy owner!

As a holder on SM and in RL I'm disappointed.

I must say, I have always been a little put off by Mal talking in the SM meeting about I'm going to do this and I'm going to do that. I much prefer someone who says we're going to do this. I like a team leader not an individual because it feels like the team person will look out for the company whereas the individual will look out for themself.

Would really help if Mal wasn't on 500k a year and only owned approx $68k worth of shares.....wow.

Hard to argue against some of these points --they’ve definitely stirred some uncomfortable (but probably necessary) reflection. I’ve likely been too forgiving about how long this is taking to play out, and, more importantly, too trusting of management’s assurances.

It’s all really good food for thought, and it certainly sharpens the resolve to call this one busted if the next quarter doesn’t deliver.

(As a side note: Strawman is many things, but an echo chamber it is not. Love it)

@Bear77 that earnings/ROE comparison post the services division being sold is a cracker -- simple but provides plenty of insight. I also find myself nodding in agreement re: the incentive criticism too @Bear77 -- you articulated this well a few years ago and it is no surprise what has happened to the business since the divestment. That was a stinking red flag from a self-serving board at the time. If most (or at least half) of the same board members remain today, that in itself is enough reason for me not to touch AVA.

Thanks for the feedback @Rocket6 - unfortunately 75% of the current AVA Board were also on the AVA Board when they sold off their services division:

The only change has been Rob Broomfield out and Mal Maginnis in (both on 11th January 2023).

AVA's CFO, Neville Joyce, has been serving as the Group Chief Financial Officer (CFO) and Company Secretary at Ava Risk Group since November 3, 2021. He succeeded Leigh Davis, who resigned from the position in August 2021. It appears that Kim Larkin was added as a second (i.e. joint) company secretary last year (2024).

However, in terms of the Board, Mal is the only newby since the Services Division Sale and the whole group turning pear-shaped.

I’m teetering on the edge of selling my real life holding here… continuous revenue downgrades in the setting is questionable management vs nascent technology which I believe has significant potential…. If Mal had a larger holding I would have more confidence … give me some of the directors buying a million dollars worth as at SPZ

I'm most interested in the detect segment as I think this has the most potential. AVA can bundle up the access segment and flog it to Dormakaba. But when I go through this update things don't add up, or I'm just making amateur mistakes. This update says Q3 FY25 detect segment sales orders are $3.8M, up 18% on the previous year, but Q3 FY24 detect segment sales order intake was $3.9M, so that's a 3% drop. And the quarter by quarter sales intakes don't inspire me with confidence as there is no clear upswing, but Q4 might be the breakout. Or not.

I think the data pool they have has real value especially if they can train their systems faster and smarter than the competitors. A quick search today shows there are a number of competitors, none of whom seem as organised, and some larger companies, like Nasdaq listed Viavi solutions have mentioned sensing over optic fibre tech, but AVA seems to be the most advanced and established in what appears to be a very young, nascent industry with a massive potential. Seeing @Strawman talk about Catapult bringing tech to an industry ruled by old men with clickboards rings true for AVA bringing tech to an industry full of plastic cops in bubble cars with oversized flashing lights.

I'm like the cat poster in the LEGO movie, I want to believe, but I'll need to see more traction before I pull the trigger again.

DISC: Held (at a loss) in RL and SM.

I don't think you're making amateur mistakes @Bushmanpat - I can see the issue too:

Source: AVA-Q3-FY2024-Trading-Update.PDF

Above is their Q3 trading update for FY2024, Detect Sales (from their 29 April 2024 announcement).

Below is their Q3 trading update for FY2025, Detect Sales (from their 30 April 2025 announcement).

Looks like a -2.56% (-3%) drop to me also, not an +18% rise. The Yellow arrows that I've added (above and below) point to the Q3 sales order intake numbers for Detect, and the Orange arrows point to the year to date (YTD) numbers for Detect at that time (for 3 quarters). They say below that their YTD number (Q1 to Q3 of FY2025) is $1.5 million down on the same time last year, however it's actually $2.0 million down - from $16.8 m to $14.8 m.

Source: AVA-Q3-FY2025-Trading-Update.PDF

They have either stuffed up or else they have restated (changed) those FY2024 sales numbers at some point between this time last year and now.

@Bear77 while it's not mentioned in the FY24 Q3 update, the FY24 Q4 update introduces the ARR as $2.0M. In the FY25 Q3 update, this is up to $2.5M, which is the same $0.5M difference between the YTD sales so maybe, and I'm drawing a long bow here, they've somehow decided to disaggregate the ARR (which is now reported in the backlog numbers) rather than the sales order intake, which they didn't before. Or they just got carried away with rounding.

OK @Bushmanpat - so that may help explain the half mill difference with the YTD numbers, but what about the Q3 number being 3% down instead of 18% up? Or do you think that also has to do with ARR being backed out of previously disclosed sales numbers?

I was listening to the AI Media interview / meeting after I listened to the AVA one this evening and I noted that SAAS / subscription revenue was being used as an explanation for a lot of negative movements in relation to revenue vs PCPs, so I understood that to mean that for accounting purposes subscription revenue that is pre-paid for services to be delivered in future periods can either be split across the various periods that the payments cover - for revenue recognition or attribution purposes, or else a corresponding liability can be raised to offset the pre-paid revenue and then those liabilities can be removed as those services are delivered in those future periods.

On that basis, I guess it's possible that AVA have backed out some of their FY2024 pre-paid ARR and spread it across the entire period for which the services would need to be provided, thus reducing the sales order intake amounts that they had previously disclosed, which could mean that the new number for their Detect sales orders for Q3 of FY2024 was then indeed low enough for the Q3 of FY2025 Detect sales intake amount ($3.8m) to be +18% higher.

That's one possibility.

However, IF that's what has happened, then IMO it's bad optics in that it just so happens that this accounting trick / treatment has enabled them to make their Q3 of FY2025 sales numbers look better than they otherwise would have, unless you go back and look at their previous Trading Updates and actually check their numbers - as you have @Bushmanpat - so it wouldn't have hurt to have included an explanation with their latest quarterly update to explain why the numbers in their quarterly update 12 months ago can no longer be relied upon.

@Bear77 Whatever the case, it's definitely helped me keep the cue in the rack for now, which is good for my investing education. i.e. have a watchlist, be patient!

Wish I'd picked this up BEFORE the SM meeting!