Brilliant, nice work on lining this up, @Strawman! Just added two questions to the Slido.

Small company with no sustained growth proven (GM deal was largely one off lift) in a competitive sector. So with no visibility on scaling to a serious level means value trap is the likely experience. Won't lose much but not likely to make heaps either at this stage. Would be better as a private company as keep the extra cash from listing and compliance costs.

Definitely agree this sector is a competitive space. One search brings up lots of companies.

I find most small tech and biotechs never like mentioning their main competitors when they know their product is somewhat similar to what is on the market and they can't answer why everyone should pick their product over the competitor in their presentations. Or even mention any external threats that may shorten the runway on their product.

Thanks for your thoughts, @BkrDzn, @PinchOfSalt, and @edgescape, they are appreciated.

BkrDzn, I agree that there is a risk this continues to be a value trap.

PinchOfSalt, I believe the risk of CXZ losing their cornerstone customer (GM) is low as they are entrenched and are deepening their relationship there, but it is a risk nonetheless.

Edgescape, relative to the competitive landscape, they are the lowest cost provider (by about 50%), but I don't consider this to be a moat in and of itself, it is important that they continue innovating.

I'm a big fan of using the Farnam framework to decompose returns into their drivers. It is discussed here in this investor letter from Farnam Street Investments.

CXZ can grow its SaaS revenue streams via:

1. Proprietary feature enhancements valued by its existing userbase of franchised dealerships
2. Commercial Partnerships bringing complementary functionality to this existing userbase
3. Expansion of the userbase itself to new OEMs and franchised dealerships

Using the levers outlined by Farnam Street, I think CXZ could (conservatively) achieve the following over the next decade:

• Sales: +10% p.a.
• Margin +1% p.a.
• Share Count: +2% p.a. (reducing SOI)
• PE multiple: -2% p.a.
• Yield: 0% p.a. (no dividends)

Summing them up, if achieved, CXZ could conservatively deliver an 11% p.a. return from here over the next decade (and possibly much more if growth accelerates into double digits). In the last quarter alone, gross profit for CXZ grew by 16%, but that is likely due to the temporary tailwinds now behind them (easing semiconductor shortage).

That's purely a hypothetical example, but the framework is a useful method for decomposing the drivers of returns. Another caveat is that CXZ is not currently producing a bottom line (NPAT) profit - instead choosing to optimise for NPAT neutrality and re-invest for growth.

Here's the above hypothetical in numerical form:

Overall, I think there is still a return to be had here. This phrase in particular sums it up; "You can see why we’re excited for the next decade of a new market regime. It will be a time for solid operators, disciplined capital allocators, and patient investors".

Been listening to the old Berkshire meetings and cant help but be reminded of one of Charlie's comments on projections. "If a company has a grim past but a bright future, we'll usually pass"