Alcidion (ALC) reported this morning, and I did think this one would've made it onto SM by now given the following - that bloody firehose is almost about to be turned off.

There's a bit to digest with this one.

For those that want a quick glance, highlights are as follows:

• FY24 revenue of $37.1M and Underlying EBITDA loss of ($3.4M);
• H2 Underlying EBITDA loss of ($0.6M), assisted by reduced staff costs in H2
• Q2/Q3 reset of cost base now delivering annualised cost savings of $6.4M
• FY24 operating cash outflow of ($7.1M), with a H2 positive operating cashflow of $4.3M
• FY24 new sales of $35.3M, with $6.2M recognised in FY24
• Milestone new contracts and extensions further validating Alcidion’s long term value proposition
• As of August 2024, $28.0M of contracted and renewal revenue able to be recognised in FY25, excluding any revenue contribution from North Cumbria contract once finalised
• Run-rate EBITDA breakeven at ~$36M1 of revenue; targeting EBITDA positive in FY25
• Continued increase in market activity with opportunities progressing into the selection stage of the procurement cycle
• ~$130M of contract and renewal revenue able to be recognised from FY25 to FY29, excluding upside expansion from existing contracts or impact of North Cumbria contract
• Cash balance of $11.8m and no debt as of 30 June 2024

Media Release can be found here, for those that like big text and numbers (like me) - preso is here.

Biggest surprise is Revenue has reversed about 8%, largely attributed to a reduction in Capital Licenses and Product implementation. This probably also explains why Gross Margins are up (marginally) - they had to put one positive on the Exec summary.

Good to see Operating Cash Flow positive for H2 (FY24), however, doesn't appear this is sustainable, yet...

We knew costs had blown out prior to contract wins - appears they've addressed this: "Responding to the delays in customer procurement cycles, we reduced the cost base resulting in approximately $6.4m of annualised cost being removed in late Q2 and Q3. The reduced cost base, combined with winning new contracts, resulted in a material improvement to our cashflow in Q4 with the reduced Q4 cost base expected to be maintained heading into FY25."

I'm going to jump to the juicy stuff (IMO) and lets take a look at the outlook. There is (already) $28m contracted and renewal revenue able to be recognised in FY25, this does have a few assumptions baked in regarding current and newly issued contracts. Based on current cost run rate for the end of FY24, the EBITDA breakeven is $36m of revenue - which they appear to be expecting.

Would love for them to be targeting to be cashflow positive, but there is some trust to win back here, so maybe that's why the bar is a little lower.

They've also wet your appetite by advising market activity is increasing, which may also explain their 10% increase in marketing spend.

Takes a bit more to build my confidence and trust back with ALC, so I'm hoping to see some more contract wins and extensions in the near term (3-6 months). If they do get some of these coming through and pick up in H2 next year then who knows, maybe they will exceed expectations, which at present are quite low.

Held.