Cogstate (CGS) reported this morning with a fairly underwhelming set of results for 1H24.
Much of their reporting is against PCP numbers rather than 2H23, as they typically have a strong 2H than 1H during the FY (according to the release).
- Revenue growth has slowed and was actually down from 2H23 ($20.2m vs. $20.9m) through a reduction in Clinic Trials Revenue
- Revenue was up 3% from the PCP
- Concerning, contracted future revenue is down to 123.7 million, this was 146.7 for 1H23.
- Positively costs were down 9% on PCP and 6% on 2H23 numbers, due to lower salary, and a reduction in FT workforce (aka layoffs)
- Cash flow from operating activities (excluding "passthrough" - someone please explain to me what this is) was at $0.5m mil
- Net Cash on hand sites at a nice $24.4m
- The company has and (IMO, strangely) continues to buy-back shares, see excerpt below:
"The Board of Directors has resolved to commence a further on-market share buy-back of up to 5 million of Cogstate’s issued ordinary shares over the next 12 months (“Share Buyback”). Under the previous share buyback which commenced on 28 February 2023 and was closed on 4 December 2023, 3,753,218 ordinary shares were acquired on-market, for a total cost of A$5,589,131. The new Share Buyback program reflects the Cogstate Board’s maintained belief in the business’ future commercial prospects, the business’ strong capital position, and supports the Board’s ambition to improve returns for shareholders. The timing and number of shares to be purchased under the Share Buyback will depend on the prevailing share price, market conditions and the capital position and requirements over the next 12 months..."
Let me get this right, (1) growth is slowly and in some cases reversing, (2) contracted revenue is going backwards, and (3) staff count has or is reduced... Yet the Board remains confident of the company's future commercial prospects? How or why is the Board confident this growth will return? Might be a question for Brad on the upcoming Meeting...
FY24 Guidance (or lack of): "Customer engagement on new clinic trials expected to remain strong... Expect improved clinical trials sales bookings in 2H24 compared with 1H24, as increased sales pipeline activity starts to deliver. The revenue impact of the expected sales bookings remains sensitive to timing of contract execution." "No specific guidance is provided."
Make of that what you will.
Overall not good, confused regarding the Board's position on the Share buybacks which makes me ponder their capital management. Looking forward to the Meeting.
Held, but confused - probably not a good sign.
