@Valueinvestor0909 good notes - great results and the free cash generation growth is impressive, which as you say, is what you get when you pull the price lever.

And while churn is trending up, it’s still below historical “norms”, so thus far customers are taking the price increases.

$XRO remains a business of two halves - and is becoming even more so, as I illustrate.

ANZ continues to do the heavy lifting with LTV/CAC of 14.3 showing the strength of the “home” market and first mover/market leading position. (I know it’s a kiwi company, but Aussies claim it, just like pavlovas. In any event, it was the first cloud native in ANZ, so that’s what I mean by “home”.) The question is, what runway lies ahead here? Can they add more value to customers or do further pricing increases drive churn?

International is harder, and more competitive, as demonstrated by LTV/CAC of 3.1 … which remains exactly where it was last year. (At least it hasn’t fallen, which demonstrates capital discipline in overseas growth by CEO Cassidy. She said she is committed to profitable growth, and she’s walking the talk).

In terms of subscriber growth (refer to figure below), the rate of net subscriber growth in Australia at 13% was for the first time HIGHER than the UK (11%), North America (10%), and even RoW (12%). NZ at 7% demonstrates what maturity looks like….so the numbers in UK, NA and RoW indicate the more competitive environment where $XRO is later to the party, as $XRO’s market penetration is tiny outside ANZ.

On the one hand, this demonstrates what a gold mine Australia remains for them, however, it puts a question mark over the longer term trajectory outside Australia, which surely is where any thesis justifying the multiple must lie?

I don’t have an up to date valuation on $XRO and have not owned it for some 11 months.

2024 FCF far exceeds what I predicted in my last model run. From inspection, volume growth is significantly lower, but margin expansion due to a combination both of pricing increases and cost control far more than compensate.

The market liked today’s result.

I need to go through it in detail, and while I accept that I was unduly bearish on the outlook when I exited, I’m not sure when I take another look that I will see value, mainly because subscriber growth outside ANZ is very significantly below all my modelled scenarios, and I don’t see how margin expansion can keep making up for that over the medium to longer term.

However, that is a tentative view, as I need to take a harder look.

But just look at that cash generation showing through!

Disc: No longer held

BTW @Valueinvestor0909 the link you posted just transfers to the Strawman.com page - I was able to access your post by Googling your page... not sure if it's just me or if others also finding this.

Looks like another CEO transition success to add to the list.

Datt Capital will soon have egg on his face

But I will give him credit for calling Adtriatic and WA1 resources although mining companies don't count for perpetual returns.

Thank you @mikebrisy and @Bear77 . I have tried fixing the link from my mobile. Hopefully it works now.

I agree with @mikebrisy. Valuation has lot of growth backed in but that was the case ever since. My thesis rightnow - sitting tight on my bum is the right thing to do and let quality company compound.

I wouldn't hold against him or for anyone for that matter. Knowing how many times we get stuff wrong - i just admire people who puts their view out there without worrying about consequences. Atleast its great to see others view.

And who knows - ????‍♂️- he may be proven right in future.

@Valueinvestor0909 FWIW, GS agree with you. Raising PT from $156 to $164 and a Conviction Buy.