Forum Topics NOV NOV Quarterly Review

Pinned straw:

Added 4 months ago

The Good:

  • Record quarterly revenue of $12.5m and annual revenue of $46.5m shows that revenue has continued to grow even through the current change in direction of the business.

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  • Operating costs of staff and admin continue to drop with further operational cuts expected over the next quarter. However as @Strawman regularly reminds us, you can’t cut your way to greatness and shows there has previously been excessive unfocussed spending in the past.

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  • Main business focus is now on AU/NZ payments, which makes up 30% of revenue , which is up from ~25% in FY23.

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  • AUDD increasing usage with ~$100m in payments processed since March 24. As the value of AUDD increases, NOV will make more from the interest in holding the corresponding $AUD. (Still insignificant at this stage). This has led an AUDD valuation of $5.1m in July. Currently Novatti holds $4m of the shares in the company.

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The Not So Good:

  • Still burning significant amounts of cash each quarter with $2.53m of operating outflows 
  • Sale of IBoA for $2.87m. This has been a very costly exercise with significant funds invested into this venture.
  • Strategic review is ongoing and likely other businesses on the chopping block. Emersion and ATX are prime candidates.


Watch Status:  

Slight improvement due to reduction in outgoings and improvement of revenue.

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Valuation:

To be updated after Full Year results.

What To Watch:

  • New cashflow positive date of H1FY25. Last chance here.
  • Number of additional businesses added after Q1FY25. This will be an indicator of NOVs ability to meet their targets. An additional 500 merchants is a significant increase on the 125 added over FY24.

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  • Q1FY25 to have a further $3m of annualised costs reduced ~ $750k for the quarter and the removal of IBoA expenses which is also ~$700k per quarter. Therefore would expect cash burn to be less than $1m if H1FY25 cashflow target to be met. 

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  • $8.4m cash at the end of FY24 means no further capital raises should be required, with a further $2.87m coming in from the sale of IBoA. At the current market cap there is little appetite for investors to contribute further capital.
NewbieHK
Added 4 months ago

Stung by this one…some lessons learned!

  1. beware the salesman
  2. beware the company trying to do everything (warning sign should have been too many irons in the fire)
  3. next quarter, next quarter, next quarter…things were always going to be better next quarter
  4. Overall: bad choices eat into the profits of your good picks - it is ok to hold cash.


No longer held

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