The Good

• Cash receipts increased back up to $2.66m. This is still off from previous highs but hints that Pointerras fortunes could be turning. Cash flow is still negative but is much closer to even than the last several quarters.

• $2.5m contract for US Department of Energy awarded during the quarter

The Not So Good

• Cash remains dangerously low at $2.7m and finding additional capital if required at this stage will be increasingly difficult
• Looking forward staff and admin costs have levelled out but product and R&D expenses are trending upwards, which unless cash receipts continue to improve will erode the precarious cash position. The presentation states that these are improving (vs revenue) however historically it does not appear that way over the longer term (cash receipts)

• It appears that there is work going on in bolt on modules for the platform. This is a worrying direction as Pointerra has still yet to stick the landing on their primary focus which is point cloud visualisation and analysis.

• Amazon digital twin contract continues to remain delayed, with recommencement now pushed into FY25.
• The quarterly summary does not provide updates across many of the previous highlighted projects / pipeline works. Either they are still in progress or have fallen by the wayside.

Watch Status

• No Change 

Valuation Status

• Updated share count. Review revenue forecasts at full year results.

What To Watch

• Further cash flow improvement expected in FY25.

• New Lidar hardware partnership progress
• Outcome of submission of pricing to two Australian electric utilities
• US electric utility vegetation management solution
• Data capture for US Oil and Gas construction project. Design validation and as-builts. Validation for further construction uses?
• Initial revenues from EMEA distribution partners expected in the middle of CY24. (Q4 Update) Project readiness discussions with Tier 1 companies. - Check revenue split in H1FY25
• New sectors with global sporting companies? Further details and how the platform is applied?
• Rollout of Mill Module across 8 sites over the next 12 months (No Update - Carried Over)
• Global rollout of Master Model with a global mining customer after completion of trials. (Carried Over)
• Award of contract in facilities management with a global company expected in Q4FY24 (No Update Provided - Carried Over)
• Further contracts from FLP are expected in CY24 - (Carried Over)

The Good

• $2.9m Florida Light and Power contract to be fully delivered and paid in CY24

• Release of new Master Model solution. New plug and play modules within the platform allow for further upselling and differentiation from a pure data visualisation package. As this toolset is useful to the mining and construction sectors it will assist in reducing sector risks in the customer base. (Only if the module performs and proves useful to customers). Further to this a new Mill Volume and Crusher Dimensions module is also becoming available.
• Expenses have continued to remain controlled, however this is critical at this point in time for Pointerra to have a future.

The Not So Good

• Customer delays continue...
• Missed previous rollout target for “Next Generation Point Cloud Data Format”. Previously this was slated for Q3, now targeted for Q4.
• The report once again lists multiple opportunities and projects underway, but these are failing to be reflected in revenue and cash receipts. In the Coffee Microcaps interview Ian stated  that Q3 was disappointing in the numbers but utility customers are back out there and spending money. Expect to announce further awards from other customers in this sector. Just over the horizon.
• Cash receipts fell even further to $724k in Q3, the lowest in the last 3 years. This has resulted in cash outflows of $2.7m leaving a cash balance of $940k. Management has reported $1m in receipts for April and further $0.4m expected in May which might keep things afloat for one more quarter, but it is likely another capital raise will be needed.

Watch Status

• No Change - Financials deteriorating, Business outlook improving

Valuation Status

• No Change - Review at full year

What To Watch

• Multiple references to “growing qualified sales pipeline” throughout the update. If this eventuates then potentially can expect to see future revenues start to trend up again.
• Q4 cash flows are expected to materially improve. They will need to be around the $3m to ensure that the business does not run out of cash.
• US Utility delays are now resolved. Management have now taken away one of the previous “reasons” for poor business performance.

• Further contracts from FLP are expected in CY24
• Award for digital twin funding from US for “managing impact of climate change on power distribution expected in Q4FY24
• Award of contract in facilities management with a global company expected in Q4FY24.
• Initial revenues from EMEA distribution partners expected in the middle of CY24.
• Rollout of Mill Module across 8 sites over the next 12 months
• Global rollout of Master Model with a global mining customer after completion of trials.
• Work is underway for what sounds like a simplified visualisation module. From experience this would be useful across the Engineering and Construction sector where providing data to clients / subcontractors can be difficult if restrictions aren’t in place.
• Further partnerships across resellers and data capture companies.
• Negotiating with a global engineering company (Jacobs?) delivering a digital twin. If successful this will provide a good case study on application of the portfolio.(No Update - Carried Over)
• Further deals with Enel across operating regions outside of Columbia (Carried Over x 2)
• Updates to the start of the Entergy program (Carried Over)
• Results from pipeline inspection trials - 500km gas pipeline - Working with several partners, this could be the start of a new growth vertical. (Carried Over)
• Digital Twin integration from construction with an Australian Oil and Gas company. It would be good to get more detail on how they are executing on this. (Carried Over)

The Good

• Partnerships with data capture hardware providers will help reach wider markets and use cases. These companies do tend to have their own software solutions though.

https://www.yellowscan.com/

https://www.teledyneoptech.com/En/Home/

• Currently pending contract announcement

The Not So Good

• Customer receipts of $1.33m. Cash receipts are now trending down over the long term.

• With operational cash outflows of $1.45m the company's cash balance is now at $1.5m. (plus addition of $1.04m placement). This leaves room for just over a quarter at the current cash burn rate. The directors believe that the cash will be coming, and its been repeated for the last several quarters.
• 
• It is now coming down to do or die for Pointerra in this regard. Looking at the expenses, it doesn’t look like there are many areas where spending could be stopped easily, unless they look at cuts to the staff situation.

There are also reportedly $1.5m in deferred payments due in H2, which could help the situation.

• Based on all the positive developments in the slide deck, one would think that the company is kicking goals. Alot of the statements sound good, but it is hard to quantify anything from the updates, and historically they have not translated to revenue growth.
• It already has been discussed heavily here, but failing to meet ASX requirements for trading halt / suspension highlights some of the issues which have been ongoing for some time.

Watch Status

Deteriorating

Valuation Status

Increase likelihood of bear case

*FY24 Annualised numbers

What To Watch

• Grid reliance programs are set to restart in CY24.
• Engaged in discussions with several new U.S energy companies for support climate change response initiatives. First round of federal funding announced, second round is open

https://www.energy.gov/gdo/grid-resilience-and-innovation-partnerships-grip-program-projects

• Negotiating with global engineering company (Jacobs?) delivering a digital twin. If successful this will provide a good case study on application of the portfolio.
• Further deals with Enel across operating regions outside of Columbia (Carried Over)
• Amazon start up delayed from December to Q4FY24.
• Updates to the start of the Entergy program
• Use of the pointerra platform by Gridvision

https://gridvision.com.au/

• Results from pipeline inspection trials - 500km gas pipeline - Working with several partners, this could be the start of a new growth vertical.
• Digital Twin integration from construction with an Australian Oil and Gas company. It would be good to get more detail on how they are executing on this.
• Next generation point cloud data format now completed testing and rollout during Q3.
• Cash flow + and EBITDA + still reported as attainable in FY24. 

Announcement

*Includes Notes from Strawman Meeting

The Good

• Enel Columbia contract shows interest in Pointerra platform outside of the U.S utility companies. Although the $312k per year value is not material at this point, there is room for scope growth once a digital twin is developed and used for network Analytics. This is unlikely to happen until FY25. The other significant upside of this contract is that Enel operates across 29 countries, so there is potential for further contracts within the company.

https://www.enel.com/company/our-commitment

• The Emersent and Carbonix deals are not material, however it embeds Pointerra Core into a wider range of customers who use Emersent and Carbonix for data capture. In the meeting Ian indicated that customers were pushing for this partnership. 

The Not So Good

• Major customer and diversification risks have become evident over the past several quarters where ongoing issues and delays from a few significant contracts have led to cash receipts 60%  (See @mikebrisy charts for clearer detail on cash flows ) of what they were in Q1FY23. Ian highlighted this in the meeting and is working to broaden the customer base. The risk I see here is that Pointerra starts to stretch itself too far and loses any of the advantages that they have in the market.

• Cash balance of $2.8m. Expenses didn’t increase significantly over the quarter, but staff costs are at the heights they have been. These have been historically higher in Q1, so potentially could come back in Q2.
• Amazon program which was material enough to warrant announcements was put on hold without market updates

Watch Status

What To Watch

• Further deals with Enel across operating regions outside of Columbia
• Amazon set to start up their program again in December. There wasn’t any indication on how far this progressed before it was put on hold, 

NVIDA also appears to be working in this space with Amazon, but looks to be more oriented towards design and work flow.

https://docs.omniverse.nvidia.com/digital-twins/latest/warehouse-digital-twins/use-cases.html 

• Potential further partnership announcements in the works in the data capture space
• The Entergy program could have significant impacts on FY24 revenue depending of the scale of roll-out and date of commencement.
• Tier 1 miner going from mine site level to 45 sites globally and potentially seven figure ARR contract. If this is implemented 
• Growth in Road, Rail, Water, Oil & Gas in Australia. After North America business review, sales resources to focus on similar wider sectors to help diversify the business streams.
• The company also views ports and airports (U.S and Australia) as material growth opportunities over the coming year.
• Next generation point cloud data format is entering testing.
• Lots of talk about ARR. Watch to see when this is reported going forward and how consistent it is.
• Ian seems to think cash flow + and EBITDA + are both attainable in FY24. Numbers will need to improve on what came out in Q1
• Ian mentioned the names of Encore, Duke, Dominion, National Grid as potential utility customers in the pipeline.

From a quick scan of the websites it looks like National Grid could be the closest.

National Grid

https://www.nationalgrid.com/stories/engineering-innovation-stories/innovative-and-futuristic-technologies-improving-our-electricity-networks



Dominion

https://www.dominionenergy.com/our-stories/five-ways-we-use-drones

Duke

https://www.youtube.com/watch?v=ID1AF0AQdeo

Here’s a small exchange I came across on LinkedIn that I think highlights some of the issues that Pointerra may have with their sales and marketing to date.

I don’t typically pay too much attention to LinkedIn posts, however in through my work I do notice the difference that well presented case studies make when trying make a product selection and the subsequent commercial justification.

Announcement

The Good

• Poles and Wires analytics module released.
• Involved in Entergy upcoming 10yr CAPEX program. This is being delivered through an EPC partner rather than directly with the Utility. This may result in slightly lower revenues, but there will be a benefit of increased awareness with a wider range of companies. This program has an indicated value of US$80m + over 10 years.

The Not So Good

• The update is generally short on detail compared to what Pointerra used to produce. ACV and other metrics appear to be completely removed at this point.
• Q4FY23 Highlights - Short Term Program Delays. What a highlight. In Q2 program delays were first announced with cash flows expected to rebound in Q3 and Q4. There were indications of a rebound in Q3, however the cash receipts for Q4 are the lowest in 2 years.

• Free cash flow is also the lowest in 2 years, but this is mostly a direct result of the low cash receipts as there are no significant increases in operating costs across the business. Staff costs slightly increased as expected.

• Cash balance of $1.492m leaves less than 1 quarter of runway based on Q4 burn. Management has stated that enough cash has been received in July to remain solvent and that the business will trade cash flow positive in the future, however this was also stated in Q3. If there are future variations in cashflows this will be a significant red flag.

• Can be presumed to be unsuccessful in the previously announced DoD tender with no additional updates provided for this sector. 

What To Watch

• No updates on PointFuse full release.
• If the cash balance becomes an issue, will management look to markets or financing for extra capital.
• Further details and commencement of the Entergy Grid Resilience program. This has been indicated to start in FY24. Given that the program needs to be established and data captured prior to upload to the platform, it’s likely that this won’t start until H2FY24.

The Good

• Return to cash flow positive for the quarter. This has assisted in the precarious cash balance position. This was only $516k free cash flow for the quarter, but this has boosted the overall cash position to $3.2m. Management has flagged that this will continue into the future.



• Operating expenses kept steady for the quarter with the exception of R&D, which jumped up on previous quarters. R&D allocations represent staff salaries who are focused 100% on R&D, so when combined back with staff costs, the totals across these two categories is similar to Q1. What potentially could be inferred from the ratio of these two costs could be the number of customers who are in an implementation stage vs ongoing product development. As others have indicated, due to the new exec hires, staff costs are likely to increase over future quarters.

The Not So Good

• ACV update continues to be vague. A range of USD$19.7m to USD$22.1m has been provided as an indication of the current range. The statement “Pointerra continues to add new customers..” doesn’t align well with this range as ACV was USD$20.1m back in October 2022. There is no context provided around these statements of customer wins and additions. Some kind of metrics to measure these would be a good way to gauge the progress of each sector as the reported segments in the half year and full year reports are only Australia & U.S
• Once again there is no Net Revenue Retention metric update, which was reported in October 2022 then subsequently dropped from the updates.

What To Watch

• PointFuse beta testing was carried out as previously forecast. Full release integration to occur in Q4.
• The trials of the Emesent integration for Q3 sounded successful, with management stating “ Integration and partnership with Emesent’s Hovermap driving growth for both companies…”
• DoD contract announcement postponed until the end of May 2023.
• No mention of packaged utility solution rollout previously scheduled for Q3 release.
• Potential further expansion of Amazon contract as Pointerra continues rollout.
• Wide range posted for impact to ACV from ongoing contract negotiations ~ $2.4m spread. How this negotiation ends up and how 3DP informs the market of the outcome will be telling of the “mission critical” status of the software. The bull case for this delay is that Pointerra are holding out on a position to set a benchmark for ongoing future deals. The other side of that coin is that the utilities don’t place the same value on the platform as Pointerra thinks it provides them.

Well 3DP caused a bit of stir this 4C...

The Good

• Expansion on contract with FPL (Value US$1.35m). What is positive about this contract is that they are using an existing dataset from FPL, so there should not be any of the normal “capture and processing” delays to be able which have previously been raised. The second thing to note is that expanding contracts with their flagship utilities company demonstrates the value that the 3DP digital twins offer and how their analytics platform has been developed along with FPL to meet the needs of Utilities companies. This is further reinforced by Vegetation Growth PoC in the works. It is indicated that these are paid trials, which essentially means that the development of the analytics modules are funded by the clients.
• Having Amazon as a client who has expanded their contract to over 200 sites provides a level of social proof to other clients in the market. This can only help with conversion of new contracts in the future. This looks to be another contract where it will take some time to recognise the revenue with the Site Explorer being deployed over the course of the year.
• The Main Roads WA tender isn’t for a significant value, however it was won via a competitive tender process, which Ian previously indicated a bit of frustration with.

The Not So Good

• Delaying the ACV announcement based on current contract negotiations. This one has been covered by many members of the strawman community and I agree with the sentiment. There is the Half Year due long after the current quarter so any significant changes could have been announced with that easily.
• The cash receipts from contracts are still not appearing as ACV continues to grow. There needs to be a point where cash comes in. My feeling is that there is a larger % of the contracts on multi-year in advance contracts than not. As the platform proves itself, these should become the exception and not the norm. I don't think expenses grew too much out of cycle, if anything the increase product costs may be an indicator of the growth of users on the platform.

• The negative cash flow quarter pushes the cash balance into a dangerous territory with only $2.75m left, which translates to 2 quarters before there’s a Hi Mum message.
• No Net Revenue Retention metric update, however this was previously in the ACV update.

What To Watch

• Currently there has not been many other material Utilities contracts announced, even though there is a substantial TAM as noted by Ian during the strawman meeting. This may change with the delayed ACV announcement. No update on the previously forecast Gulf Power contract which was anticipated in Q2
• Potential for the Amazon contract to be expanded across a further 700 sites. (~$4.5m?). Global sites after that? Expansion to internal digital twins, which would be assumed to be of a similar total value. No date was provided on the development time frame.
• Transport specific analytics to be deployed through-out 2023 to assist with winning global DoT clients.
• Q3 trials of the Emesent application integration will likely open up a large market opportunity for the direct capture, particularly with Mining clients looking at the Emesent website testimonials and use cases.
• Testing of PointFuse integration to commence in Q3 for rollout in Q4
• Announcement of DoD contract award in March/April. @Nnyck777 mentioned that the departure of Jason Higgs doesn’t bode well for this, however I think this has more to do with the fact that Pointerra have realised that they are not equipped to approach these contracts alone and have chosen to partner with existing defence contractors. (I still think you might be onto something about company culture)
• Monitor product costs to see if the AWS upgrades mentioned result in a reduction.
• Mentioned in previous 4C - Developing packaged solutions for smaller utility companies. Scheduled for release in Q3

Narrative

• The latest update hasn’t changed my overall narrative for 3DP. They still have a solution which solves many problems across a wide range of industries, with a lot of irons in the fire. It is just taking longer than the market was originally anticipating. If cash continues to remain an elusive piece of the puzzle, then it will be back to the drawing board.

The Good

• 10.5% increase in ACV to US$20.13m, which is slower than the previous quarter but is still demonstrating a strong annualised growth rate.

• Operationally cash flow positive for the quarter with record cash receipts of $3.4m which is trending in the right direction and with expenses staying relatively flat in particular product costs and R&D operational leverage should really start to come into play in the coming quarters.
• There has been growth in staff and admin costs which is to be expected as Pointerra grows with its market share. Given the positive cash flow starting to emerge it would be good to see a potential increase in the advertising costs to potentially assist with brand awareness across some of the smaller customer segments.

• Addition of Net Revenue Retention statistic with 172% YoY which is a solid number when compared to other successful SaaS companies in the market. 
• Updating of online sales ability with planned upgrades to trials and subscription process. 
• Expanding range of sales opportunities through partnerships, which relieves pressure on Pointerra’s internal sales team which Ian described as currently an issue currently the business is dealing with. These arrangements may mean that they receive less direct margin from sales, however they can leverage the knowledge, networks and customer base of partners to continue growth in the product offering and revenue streams.
• Use case widening with Smart Warehouse digital twins developed to improve efficiency and further ongoing development of the Answers and Analytics platforms, i.e clash detection, surface changes,

The Not So Good

• It looks as though 3DP is finding it difficult to scale to the opportunities currently opening up to the company. It shouldn’t be a scale at all costs outcome, however for Pointerra to become the global player that they have the ambition to be, they will need to grow significantly from the current size. It will become a very crowded sandpit and Pointerra risks losing their first mover advantage.

What To Watch

• Expansion of Velociti warehouse geospatial analytics partnership expanding to 14 sites in Q2 and up to 200 in CY23. Potential material contract.
• Pointerra solution to be rolled out with Gulf Power in late Q2
• Developing packaged solutions for smaller utility companies. Scheduled for release in Q3
• Mining PoC analytics package continuing development.
• Progressing discussions with Ports & Airports
• Involved in bid for military contract that is scheduled for a decision in Q3.

Ok so a fairly long post but some rough notes from the excellent meeting with Ian. It's not a comprehensive list so check out the meeting if you have the time.

• In 2020 discussions with Bevan Slattery considered expanding the business model into data capture, not just storage and analysis, but instead, continue to maintain focus on core business where margins are higher and cross border sales are easier. Now data capture companies look to be coming to 3DP to host and manage datasets proactively rather than on demand.
• Reduction in bitcoin mining operations has reduced the competition and demand on server computation resources.
• Breaking into the AEC market has been hard as currently digital engineering teams are wedded to the way things have always been done.
• Jacobs the biggest AEC customer “will be a seven figure ARR contract ‘pretty soon’ and probably beyond that.”
• Entered the utilities market by chance. Now the opportunity is quite large. In the US there are 200 listed utility companies and circa 2500 state / county owned utilities.
• The use of 3d data in America compared to Australia is ~100x 
• PGE spends $35m per annum on lidar and imagery to be able to understand what's happening across the network, previously taking months or up to a year to get the data. 3DP allows that workflow to be reduced significantly. 
• Sales team working through utilities one by one. By Ian's language it sounded like sometimes these can be hard sells. As evidence of use cases from existing contracts grows this helps to build the sale case. A lot of the utility companies are collaborative and FPL is a big advocate for 3DP, but still need to cross the hurdle of changing the mindsets of how it’s always been done.
• Ian made the comment that some of the customers believe that 3DP may become a FERC (Federal Energy Regulatory Commission) standard. https://www.ferc.gov/electric
• On growth of sales vs managing cash flow Ian stated that there is a lot of interest from institutional investors to raise funds to accelerate growth as they have now demonstrated the market and the capital light business model. “What we want to do is become a globally relevant, extremely high growth, high margin subscription business” and sales require cash.
• Some frustration at the Airovant team leaving but pointed to an example of an opportunity they brought in - Working with Amazon on the automation of their fleets of driverless trucks around distribution centres by hosting digital twins.  
• During the storm response to Hurricane Ian they met or exceeded all KPIs on the contract which has helped cement trust in the company. Confident that this will lead to being formally added to the storm response solution. Other utilities in adjacent states to Florida have started reaching out.
• Looking to try to get into real time autonomous data analytics space. Collision avoidance, threat detection etc. See opportunities in analysing the data and selling the outcomes.
• Restart of trade shows means that they can get in front of customers to educate about 3DPs capabilities.
• Considers traditional workflow their largest competitor. 
• Other competitors are focused on one sector, whereas pointerras point of difference is the breadth of use, strength of analytics and business model.
• Getting good people is an ongoing challenge
• The $50m ACV target is still considered achievable. Eg. FPL $6-7m per annum fully deployed across the whole enterprise. Enough deals in the pipeline to reach if they secure them
• ACV vs Revenue. Contract from utility example - win contract, value enters ACV, takes time to get existing and new data to be given to 3DP, time to embed solution into workflow, then can start invoicing.
• Don’t charge implementation fees, only the subscription fees.
• Churn at the smaller end contracts $500-$1000/month customers but not with larger contracts
• Team in Glasgow talking to Network Rail using Sydney Trains as an example.
• Every Tier 1 miner as a customer - but only at a mine site level. Ian considers this a potential high growth area in the next 12 months.
• Ian states the Defence sector as the one that excites him the most given the opportunities. But it still needs more work.
• Partnership with pointfuse to provide AEC solutions. https://pointfuse.com/
• Recurring theme of struggling with securing good sales team members
• Expects costs to grow by around 50% in around FY23

ACV Announcement & 4C

The Good

• Additional 12% to ACV, which is slightly below the growth rate I’ve used in my forecast, and this will get harder to maintain as the company grows, so it might be better to apply some more conservative figures.
• As @Wakem stated, management have provided a detailed update of strong near term growth prospects across the targeted sectors which provides confidence that the company has a clear strategy to grow and maintain ACV growth:
• AEC
• Working within the AEC sector to provide targeted reporting solutions, with new AEC products being released in Q1 & Q2 of FY23. Coming from the construction industry and seeing the appetite for increased usage of 3D scanning across sites, there are significant opportunities within this space if the platform is developed correctly.
• Additional appointments to target US AEC growth
• Utilities
• Expected growth in Entergy contracts
• NextEra Energy solar POCs expected to add addition contracts in FY23
• Currently in a competitive tender process with two US utility companies. I find it interesting that they say they normally avoid this process. Likely due to the costs involved in the tendering process and lower margins at award. If 3DP are successful in these, it may entice them to dedicate resources to participating in more of these processes in the future. I think as the space gets more competitive this will be a requirement for contracts with major companies and they will need to have a strategy on how to approach these processes.
• Mining, Oil & Gas
• POC with FPSO construction company. 
• Partnership with aerial inspection company
• Transport
• Suburban Rail Loop project in Victoria is a multi year project that will involve most of Australia’s major construction companies. Hosting the project data for this project will provide wide exposure across the AEC sector.
• Defence
• Presenting at conferences organised by the Australian Defence Force

The Not So Good

• Second consecutive drop in cash receipts down to $1.66m. This has already been discussed by @Strawman @Noddy74 and is currently the biggest detractor from what I can see as a promising business. I had forecasted an increase back to $2.8m in receivables for Q4 and my valuation is based on cash receipts of $17.6m in FY23. Based on the latest results this seems like it will be completely unachievable. I would like to see a little more commentary around the payment terms. Multi year in advance works? What % of the ACV falls into this? This would be a big factor in why cash is lagging so far behind. As @JPPicard stated, embedding themselves as a must have system within organisations in the long term would help with future stickiness of their platform.

• Also a minor slip up in the reporting, quoting $2.85m for March Quarter when this was in the December Quarter.
• Management have been reporting since the December quarter that in coming quarters they will add additional reporting ACV across sectors and subscription numbers. The new metrics have still not been added with the same paragraph copied from previous reports. I don’t mind that they haven’t started showing these numbers yet, as generally the reporting is consistent, it's more that if you aren’t going to add them, don’t bring it up until you are ready.
• FLP storm response contracts are based on a data upload / management per event rather than an ongoing service contract. This makes the revenues a little harder to estimate consistently going forward. The contract style makes sense and isn’t a negative, it’s just slightly different to how I had previously understood the service.

What To Watch

• US, UK Expansion & Acquisitions targets carried over as growth strategies
• Conversion of the opportunities detailed across industries and if any of these open up meaningful contracts to match those in the Utilities sector.
• $3.6m in cash at the end of Q4. With cash flows still lumpy, this only provides 6 months of clear operations based on the Q4 cash burn. This means there is potentially a need for a capital raise in the near future as the 3DP starts growing across multiple regions. 

Disc: Held

The Good

• Cash flow positive quarter ($64k), minor increases in R&D expenses inline with growth in cash flow, continues to show discipline of management.
• Developing the product to meet customer requests and needs, rather than developing a product and trying to find a market.
• Partnering with hardware companies to improve product functionality. These partnerships extend Pointerras reach, along with identifying where the issues need to be solved in industry.
• Market penetration across sectors outside of Utilities appears to be gaining momentum, with positive updates across construction, mining, transport and defence sectors.

The Not So Good

• Delays from third parties impacting invoicing. Having the integration and use of your product out of your control is a risk. Customers will ultimately push for their data, however not having fixed time frames could continue to impact the delays between ACV announcements and cash receipts.
• Cash receipts down on Q2 $2.85m vs $2.4m. Although ACV at Q3FY21 was US$7.89m which if broken down to a quarter means the incoming receipts aren’t too far off the mark depending on the exchange rate. So it does indicate that cash receipts are tracking with the ACV growth.

What To Watch

• US, UK Expansion & Acquisitions targets carried over from H1 Report
• Q4 cash receipts ~ $3m will be a confirmation of invoicing continuing to follow ACV trend
• Contract opportunities in utilities from Australian POC trials and recent discussions with UK and European companies.
• Targeting offshore Oil & Gas facility maintenance contracts.
• Updates on results from defence trials.

The Good:

Revenue up 104% and ACV up 47% compared to H1FY21 demonstrate that for now Pointerra is maintaining the high growth rate that is expected by the market. The company is also growing across all sectors, not just reliant a few large clients.

Cash flow positive operations in Q2, however I see this staying reasonably flat or even going back into the negative as the company starts to expand internationally. It looks as though management is timing international expansion as cash is set to become available and the product is proven, rather than putting their hand out to investors which is a positive for me at the moment. I think it was on a Baby Giants podcast where this was discussed for another company (forget which one) where they took too long to grow due to funding their own expansion and were overtaken by their competitors, and that is a risk here particularly in the competitive growing sector that they are playing in. Something to watch.

Announced that reporting metrics will be expanded in the future rather than just ACV, which will provide greater insight into segments, customer value and business operations.

The Bad:

Revenue and cash receipts are still lagging contract signings by a long way, so if the company needs to scale quickly to maintain further growth, this may have to be assisted by external funding. Previously Ian has mentioned in the past that they want to be selective with their growth, so this may not be an issue, but one to watch.

What To Watch / Targets:

Opening of office in the US is a big step for the company in being able to provide a more active sales and service to the US customer base, which is currently Pointerra's largest market.

Expanding global operations into the UK, Europe and Middle East. This is also another big step for the company as currently revenue only comes from Australia and the US according the H1 segments breakdown. Having broader exposure to other markets and companies will not only provide a wider market for sales but also provide more insight into a wider range of customer requirements. If implemented correctly this can only help to continue to refine and expand on their data analytics services improving the product overall.

On the lookout for potential acquisitions. I think there could be value here particularly in developing the analytics features but wary of growth by rollups. With only $5m in cash, anything substantial will need a capital raise or issuing of shares as flagged by in the ACV update. So far 3DP haven't ventured to far down this path.

Pointerra rarely gives much in terms of business forecasts or specifics around business development so taking a look through the end of year report for things to watch over the coming periods and in preparation for Ian’s visit to Strawman.

It sounds like the new integrations of Asset & Risk Explorer are having some positive uptake with the existing Utility customers with further POC contracts. It is mentioned these are also paid trials which are unlikely to contribute much to overall ACV but cover the sales exercise. Working with a large construction company, I have seen how much time and effort it takes to roll out new systems across all operating regions, sometimes taking years from initial integration to business wide use. So far it appears that there has been positive uptake from the large Utility contracts, which I expect will continue to grow as the Pointerra system is deployed further across their businesses.

The digital twins system established for mining business are being rolled out in the US, which expands the market for this. I will watch the uptake on this, and if they start to develop further analytic solutions for the models. (K2Fly buyout/ integration?) There are plenty of other applications for digital twin models, however there is a lot of competition in this space, so it would be interesting to hear from Ian what they identify as 3DPs particular differentiators.

The biggest takeaway I got from this announcement was the POC for a warehousing facilities management / autonomous vehicle navigation solution. This is a new space for 3DP and a rapidly growing sector globally. This is definitely one to watch progress of.

The MOU with Advanced Mobility Analytic Group sounds like it is fairly early at this stage, but reiterates how Pointerra is expanding use cases for their applications. My takeaway from this is that with this expansion, to deliver for their customers Pointerra is likely going to have to continue the employee growth in FY22. (Reported headcount increase of 12 to 29 in FY21)

There are a lot of exciting prospects for 3DP over the next year and it will be interesting to watch how they play out.

Disclosure: Held

Ah Pointerra, my rocket that flew to the moon, but with great gains comes great expectations and it looks like 3DP’s latest announcement has failed to meet market expectation again as it continues to drift down back to earth.

There are still a lot of positive takeaways from the announcement. Annual Contract Value (ACV) grew 24% over the quarter to US$9.8 million, although there is some debate on how much the Airovant acquisition contributed here. If this was the reported average annual revenue of US$1.4 million that bring organic ACV growth back down closer to 6.5%. Taking a step back, if you look at the ACV growth for FY21, it is up over 300%. At the current market cap of $274.51 million price / ACV still stands at around ~ 21.

In the report it is indicated that there have been new contracts awarded across a broader range of sectors, tail winds such as massive infrastructure spends globally and with the addition of new data insight features such as Asset & Risk Explorer providing further value to customers beyond a store of data, the sentiment appears that organic growth in ACV will continue.

There has been little change in the narrative around the potential Defence contracts, however the change from part time to full time for the Defence consultant is a positive indicator as there could be significant value in a single contract win.

Cashflow was positive for the second straight quarter, just ($0.1 million) with a cash balance of $5.18 million which leaves plenty of room for funding further expansion and growth in staff etc.

I’m still positive on Pointerra’s long term growth prospects and will continue to hold, however the valuation is still quite high even after the share price decline to 44% of previous highs. If there are any current takeaways from Pointerra, is that I need to further develop my sell strategy prior to entering a trade.

Disclosure: Held