Charif has to be one of my favourite guests.

• Consistent, clear and candid in his messaging.
• Significant shareholding, owning ~5% of all shares
• Despite being cashed up and with a stated intent of making some strategic bolt-on acquisitions, they have not yet progressed. Not because they didn't find things they liked, but because the prices were irrational
• Clear focus on their core strengths and resolve to stay within the circle of competence
• Culture and reputation are very much a focus, and is what helps underpin lead generation and retention.
• Approach to AI is sensible and without hype. Very much leveraging APIs and products from 3rd parties as opposed to building internally (an area they dont have expertise on).
• Expansion of the team is very much about enhancing the product offering, with huge potential to cross/up-sell to existing users
• Not dismissive of competition (including Syntex)
• No interest in emerging markets (not yet sophisticated enough, and a lower preparedness/ability to afford DSE solutions. And, besides, a lot of opportunity still within the OECD
• Expects the MSP space to continue growing strongly thanks to all manner of tailwinds. He expects 10%pa
• Is focusing on ease of use for MSPs (quick provisioning of services, simplified billing, and strong customer support). They aim to integrate backup with security solutions, as the lines between the two are becoming increasingly blurred.
• Drop Suite positions itself as a premium product in the market, allowing MSPs to make higher margins when using their services.

Expanding on the Syntax threat, while Charif acknowledged that Syntex has a "superpower" due to faster data restoration capability, he believes that Syntex lacks critical features, is costly, and doesn't adhere to best practices for disaster recovery, like keeping data in separate environments. Despite the initial market reaction, Syntex hasn't posed a significant threat to Drop Suite's business (which so far at least is supported by the numbers).

I do have some concerns over the valuation at >6x annualised sales (or the current ARR) there's a lot of growth priced in. (Given the heavy reinvestment and minimal NPAT, the PE is >400x)

But this could be somewhat deceptive.. a few more years of continued strong revenue growth at a decent margin could really bring those multiples down very quickly.

So, overall, very happy to keep holding.

What's wrong with this picture?

Well, nothing as far as I can see! Dropsuite just continues to get it done -- excellent top line growth while maintaining margins and delivering positive operating cash flows. Oh, and a balance sheet that is rock solid.

Ok, shares are trading at 5.5x ARR -- so it's not like the market isn't recognising what's going on. But there's good potential for operating leverage here, and a good acquisition (which appears likely at some stage) could help too.

Happy to keep holding.

I really like Dropsuite's CEO Charif, who comes across as a very straight shooter.

He strikes me as very customer focused, with their solutions aiming to solve genuine issues for customers. There appear to be genuine tailwinds for the sector too, and he seems to be thinking well beyond the next reporting period.

A few comments underscored the discipline in capital allocation decisions. There's a big pile of cash that is there waiting to be deployed, but they have walked away from a few opportunities (usually a good sign of a discerning buyer) and it's very much about building complimentary offerings aligned with the core value prop.

As he emphasised last year when we spoke with him, they were focused on viability and cash flows "before it was in vogue" and plan to remain self funded going forward.

I thought his response to the potential threat of Microsoft's backup solution was sound, and pretty much matched with the observations made by other Strawman members. It certainly doesn't strike me as an existential threat in any way.

There is, or at least was, a lot of hype around SaaS and the associated economics on the ASX, but this is a genuine SaaS business with all the characteristics you like to see. Not just sticky, high margin revenue, but excellent cash conversion.

And, of course, he's very aligned, with over 33m shares he's easily one of the largest individual shareholders, and is very long standing having been in the role for over ten years.

At 6x ARR, or roughly 80x EV/EBITDA, shares are hardly cheap in any traditional sense. But the growth is strong and consistent, and there's a long runway ahead.

Disc. Held (but not as much as i'd like)

I have to say that I found the Dropsuite CEO -- Charif Elansari -- to be quite impressive.

He struck me as having a clear focus on what advantages the business has, and seems to be striking the right balance between sustainability/viability and investing for growth.

At a high level, I like:

• Strong industry tailwinds, with the industry set to grow at attractive double digit rates for many years. Dropsuite seems very well positioned in their chosen niche.
• Highly scalable, with the business leveraging the growth of their Managed Service Providers (MSPs) -- in both scale and number -- to drive revenue growth.
• Extremely low customer churn, and >120% revenue retention as clients add more modules.
• Expanding product set, with a resolute focus on making life as easy as possible for their MSPs
• Strong focus on retaining key engineering talent, and building long term incentives
• Chariff has been associated with the business from a very early stage, starting himself as an angel investor in 2011. His passion was pretty clear.
• Rock solid balance sheet (although expect some of this cash to be used for acquisitions)
• Unapologetic and consistent in investing for growth, but with a focus on return on invested capital.
• CEO is the 5th largest shareholder, with 4.3% ownership of the company.
• CEO has deep industry experience (was a founding member of Google Singapore)

Shares are presently on about 6x ARR, which isnt too excessive given the growth and runway (ARR was up 68% over the year and 13% from preceding quarter).