At first glance, Prophecy’s Q1 update looks pretty bad.
Why?
I simply can’t get over “Annualised recurring revenue (ARR) grew to $ 22.56M as at 30 September 2023”.
Why? Because ARR actually went down. From full year presentation 3 months ago: "Cash Combined ARR growth of 26% to $23.2M"
So ARR went down by $640K, not a massive deal, sure, but to reach cashflow these guys need to be growing 15%+, not going the other way round.
Looking at their chart, we can see that this happened because “legacy subscriptions” and “Snare maintenance renewals” both went backwards. This is expected as they transition Snare to Saas, but I would have thought stronger growth in eMite could have covered for this.
The cash pile also went backwards, which they claim to be expected, and I’ll grant them that. Especially in light of invoices to the tune of $ 5.96M that went out year to date. So cash should be back to stable after the money is in the bank.
They’ve given us pipeline information for both eMite and Snare, if we add them both up, assume a 9 month sales cycle to end of year, and 20% average conversation rate, then we get an extra $4M of ARR by end of year. This would be good to see honestly.
Still have lots of trust in Brad and the team, so hopefully they increase the momentum from this point.
Would love comments from anyone attending the AGM.