Trying to process how I feel about Pointerra’s radio silence in the last quarter.

On one hand, stopping a big client from churning is hardly worthy of an ASX release. This may be especially true for Ian who seems to have a love/hate relationship with the ASX’s announcement rules (he mentions this often in interviews).

On the other, the share price’s sabotage could have gotten leadership to be a little more promotional about any noteworthy progress made in the quarter. 

That a large client churned isn’t cause for the thesis to break for me. Clients churn even from good software, often with valid excuses on their end (we got bought out, we’re consolidating, CIO’s gone mad, etc…) 

But that a large client’s churned with growth otherwise completely stalled for one full year, with little progress elsewhere isn’t good. 

I’d love Pointerra to take this as an opportunity to step up their game in onboarding clients faster (like much faster), and also step up their game in how they report. I’d like them to lose the ACV metric and adopt a more standard ARR metric reflecting live use of software to date. 

Anyway, rant over, not much longer to wait now. If they report on the last business day of the month as they do normally, this would be the 28th.

Two weeks to go lads. 

I was preparing some thoughts on this one and it seems everyone else beat me to it, include @Strawman himself. What a community we've got here!

I think you really valid point @Noddy74 and @Valueinvestor0909 on what appears to be a growing gap between reported ACV and cashflow. 

Incidentally, I remember Claude Walker mentioning this too on The Call a number of months ago as something to monitor. He suggested valuing this company directly on cash receipts; and if we do; it certainly looks more expansive, coming in at a P/S of ~23.

I’ve heard Ian Olson present and get interviewed many times now, and I’m surprised this question never came up. 

They make simple comments on this in their announcements: 

July 2022 Enterprise Sales & ACV Update : 

• “Revenue recognition and cash generation from these newer contracts continued to emerge during Q4 FY22 and is expected to accelerate into FY23 as further platform deployment milestones are met.”
• “Importantly, the initial upload of legacy data by new customers (as well as new data provided by 3rd party contractors) to the Pointerra3D platform impacts the Company’s ability to fast-track platform deployment for these new customers, which in turn impacts invoicing and cash generation. This one-off initial drag on deployment in the first year is not expected to continue in subsequent years with the customer.”

Essentially, what I’m getting from this is:

• Customers are slow moving at the onboarding stage.
• The onboarding stage is also reliant on 3rd party contractors to provide data to upload to their Pointer3D platform. 

If I had to add my perspective from having worked in the software industry for a number of years, here’s a potential dynamic that I think may be happening: 

1. PointCloud Software is a competitive space. 
2. To compete, It’s possible that Pointerra are positioning their product with a number of features in their future roadmap to incentise customers to move forward and make the difficult switch from their incumbent. 
3. In such a scenario, they may request a signed contract from the customer, but no payment upfront. 
4. Take this with a big grain of salt; this is purely my speculation on what I think may explain the delay. 

This is strawman in the end, so I’ll state my high level thinking: whilst this gap is certainly something to continue to monitor, I’m not worried about it too much. Small companies always need to do things slightly differently to win against the big guys, and no small companies look awesome on all metrics. For the year, they’ve grown ACV at 86%, I think that’s a rather impressive achievement. I certainly don’t think it’s cheap at the moment, but for the long term investor, it’s certainly one to keep an eye on. 

Disc: Held.