Not a terrible result from Envirosuite. I missed the first part of the briefing this morning, but my main thoughts are (starting with the negative):

• The team is way too focused on the share price. Yeah, i get it, I bet a lot of investors are asking wtf!?, but stop worrying about it if you truly don't have any near term funding requirements. I messaged the following during the call, but they didn't read it out:
• "Stop worrying about the share price. All you can do is be consistent, candid and clear in your communication and the market will either get it or not. But what it will ALWAYS "get" is a steady improvement in key fundamentals. But if you really did want to send a potent signal to the market in regard to your view on value, buy some shares on market -- and something reasonable! Money speaks louder than words.."
• The level of skin in the game is woeful in my view.
• Jason likes to talk a good game, and I'm sure he's being genuine. But everything always seems to be about to happen. Don't over-egg the pudding!
• Claiming $2m in new ARR as a "strong result" in a typically softer quarter (due to North American holidays) would be fair in comparison to other quarters, but it's still less than the $2.1m in the prior first quarter. Pretty sure holidays would have been a factor in Q1 FY23..
• Anyway, total ARR growth of 10% was reasonable, but not as high as i'd have liked. To be fair, if you exclude the "churn event" in the prior 3rd quarter, which isn't entirely unreasonable, ARR growth would have been 16%.
• Also good to see North America do well -- it accounted for 55% of new ARR -- and the company seems to be winning new clients across all segments.
• We seem to be seeing some traction with Water too, a new enterprise deal with Ion Exchange (an Indian based water treatment company) is encouraging. There's potential to roll out to a lot of additional plants if successful. Not sure of the exact quantum, other than it being "significant"
• Aviation won a significant expansion with a key UK airport customer (they couldn't say which, but seemed to hint it was one of the bigger ones). A rebound in the aviation industry is helping to stimulate more investment from customers and they are especially focused on community engagement.
• Industrial was pretty ordinary, although Jason did stress the lumpy nature of deals here. ARR also impacted by end of life contracts (ie. subscription not renewed because the customer project finished). It was good to see some new and notable customers -- hopefully we can see some of the "expand" phase of the strategy play out here, they certainly seem to have a lot of sites.
• While new ARR was ordinary, project sales were up 31% on the pcp -- and these are a good lead indicator for future revenue (Jason again stressed this in the briefing)
• Perhaps the main thing was the reiteration of the EBITDA +'ve target for FY24 (after rightfully deducting capitalised development spend).
• There was some rumour about a potential takeover of EVS raised by one of the attendees, but Jason batted that off as speculation. Frankly, i'd be annoyed if it was taken out for a low-ball offer.

The company has a market cap that is only 10% above its annual recurring revenue (It's a flawed metric, but you have to work with what you've got!). The near term working capital demands are no longer threatening a raise, we're seeing new customers and a reasonable level of growth in recurring revenues, as well as a large opportunity across the three divisions. It's a super niche area, but one in which EVS is the global leader.

Yeah, it hasn't executed as well as I'd have liked, and they got over their skis for a time there in terms of cost management and growth initiatives, but they've got a good offering across various sectors that all appear to have some traction.

I'm continuing to hold. I wouldn't call EVS a high quality company (although that potential exists for the future), but the valuation seems compelling.