With the release of the H1 Results after the close on Friday, I did a 'snapshot' analysis on those metrics (see my previous post) which displays progress (or lack thereof) during the period, this intended to highlight the strength of 'carry' into the second Half. The NAV plunging to more than - AUD 3m (Balance Sheet Insolvency) coupled with the Auditors Report coverage on the Company's ability to continue to operate as a Going Concern constitute a sobering thought which cannot be dismissed. The Deferred Revenue and Receivables numbers as at 31 Dec hardly inspire and the AUD 2 m shortfall when comparing Receivables and Payables number all suggests the squeeze is set to continue. The AUD 100k decline in Payables is not material.

I have subsequently gone through the narrative + numbers in more detail and can comment as follows :

• My comment on the Company returning to Positive Operating Cash Flow in H2 was incorrect. Whilst this is certainly implied, the Company said..." H2 FY24 offers the opportunity to showcase the capability with a view to the delivery of a POSITIVE H2 EARNINGS result for the Company." This becomes a message on the Income Statement Revenue) opposed to the Balance sheet (Cash). Also a huge uptick in terms of aspiration.
• The narrative clearly states that the program delays are resolved and the Utility spend is coming back. This coincides with the fact in the USA, the financial year runs January to December. So Utilities are cashed up interms of Budgetry spend. Tax credits will be flowing towards Utilities from the Fed's Infrastructure USD 1.25 TRILLION Infrastructure Resiliency & new Climate Change intergrations. Remember Data Capture & Analytics will feature as a 'front end' activity in any plan in support of prioritizing work.
• Right now, the ASX have suspended Pointerra regarding an announcement on a 'Material Contract Award'. Amazon roll-out is planned for Q4 FY 24.
• Then, the Company have advised that during the Half Year, spend by existing Customers grew across Pointerra's target market sectors with the award of multiple new contracts with Existing and New Customers. So, do we have a new pipiline of growth across the non Utiliy verticals.
• Building on the above, they report that the Company continues to EXECUTE on it's Strategy in both Mining and Oil & Gas Sectors, focusing on the use of Pointerra3D to support Capex, Operations & Maintenance with an Australian Miner. Implies awarded work in progress IMO.

If we go back to the key message in the H1 Financials. " The Recorded Revenue & Customer Receipts were well below Company expectations due to previously communicated program delays with KEY US Energy Utility Companies, which impacted the Company's Invoicing and Cash collection, ALL OF WHICH are expected to resolve during H2 FY24.

In closing we have felt the pain of the pause in buying by the US Utities. If they are back, Revenues will ramp USD 10m / year based on FY 22 numbers, Then add the Entergy deal conservatively worth USD 7 m a year PLUS

• PLUS Amazon
• PLUS further participation in Fed's USD 1.25 TRILLION Infrastructure Resilliency Program
• PLUS growth ex numerous new Partnerships
• PLUS new momentum in other verticals
• PLUS new geographies

Having done the Research on the process being adopted by Utilities to embrace the ginormous USA Infrastructure andClimate Change agenda + validating that the 'Pause' is real, I am staying the course on this one. Can reassess with the ASXapproval 'material contract' announcement, hopefully this week, the Q3 4c (end April), the Q4 4c (end July), the FY 2024 Financials and if all fails, a Banya Software takeover offer where Ian & Team remain involved in the Business and we shareholders get offered x cents per share.

RobW

Despite still being in an ASX Suspension Period pending resolve on an issue over an announcement regarding a 'Material' Contract, the Company released their Half Year results after the market closed.

Herewith a copy of my Hot Copper post which provides some early observations.....

The Half Year Financials were never going to be pretty. The Company is essentially in what they call Balance Sheet Insolvency. Whilst this is different to trading Insolvent (where you cannot TIMEOUSLY fulfil your obligations in terms of Liabilities),the underlying comparisons over the last 6 months do not point to an improving situation. 

Negative NAV ...extends from AUD 1.581m to AUD 3.207m

Receivables... down from AUD 2.723m to AUD 0.606m (compared to Trade&Payables of AUD2.518m)

Deferred Revenue ...down from AUD 2.712m to AUD 2.270m. Note : A portion of this may be for Advanced Payments and therefore not Accessable.

And finally, the only 'small' positive

Trade & Other Payables .... down (less than previous) from AUD 2.615m to AUD 2.518m

Lots to digest in the report, but the above IMO points to the urgent need for a capital injection. CR, loan or if Directors stump up. Debtor Factoring... not much to work with.

The Company talk of a cash flow positive H2. Had they used the ' Changes since 31 Dec. comment section' to provide some numbers on Cash Receipts during Jan & Feb or booked Revenue since 1 Jan, may have supported their stated confidence on a rebound. But not to be, Just the confirmation of the AUD 1m placement to an original Founder. Helps but not enough to fix the above.

Next 4 months crucial IMO.

Rokewa

ASX have suspended Pointerra for not responding regarding details / content of 'a material contract award' announcement which justified their trading halt on the 26th. Announcement was not forthcoming this am and the ASX challenge was yesterday (27th). Welcome the fact that the ASX are all over this. Time for Ian to realise Pointerra is a listed Company and non compliance has consequences. Recent placement of 13 m shares at 8 cents (90% premium to the market price ??)

All said, the probability of Pointerra delisting and going the Banya Software route is up a notch.

Let's see how things unfold. H1 FY 24 results due by COB Thursday.

RobW

Easy to look past the recently announced Board Changes as all in the course of business. Someone stands down and someone new (with perfect skill set) steps up.AGM on the 22 November 2023.

Worth checking out the Banyan Software website. You will quickly realise that the newly appointed Non Exec Director may have a different agenda. Whether Ian has initiated this is anybody's guess, but on the back of a challenging year (program delays), the inability to land the FULL cap raise, the fall-out in terms of investor sentiment and the share price, and then comments like 90 days comes around too quickly (ASX reporting), just maybe they are seeing this as a pathway to de-list / go Private.

Herewith Banya Software's Xmas message end CY22....

Looking forward to an exciting 2023!

We're excited to have grown to 25 businesses and over 1000 employees across North America, the UK and Europe, and Australia. And, we're proud to continue to be 100% referenceable by all the owners who have chosen us as the next permanent home for their business. There's significant capital behind us and we expect to be very active across Australia and New Zealand in the year ahead.

My money is on a much bigger agenda here.

RobW

Evening All

Bit late to the party with my thoughts on the Pointerra 4c. I will attempt to build on the coverage provided by others with some personal observations.

Let’s start with an extract from the ’Outlook for FY23’as provided by Ian Olson in the FY 22 Financials…

‘As we move further into FY23, the Company remains laser-focused on balancing our ambitions to deliver exceptional organizational and financial growth with a disciplined approach to financial management. Success will likely result if we are able to focus on the biggest drag on growth – identifying, onboarding, nurturing and retaining exceptional people……. ‘

At the time, I interpreted this as ‘Our future success is only subject to acquiring/ retaining the correct skill-sets across the organization’.

So how have they done over the first 6 months of FY23? (I will park the shocking AUD 1.9m Customer Receipts number for now)

Pointerra have never been light on the narrative. In fact, they have often been overly generous with the amount of information shared. Over and above the headline news on three new Contracts, the latest 4C carries more information on progress than anything before.

Herewith a couple points, which highlight real progress:

• A ‘material’ Financial contribution by the Transport, Mining and Oil & Gas sectors, this reflecting the continued development and adoption of the higher-value elements ‘Analytics’ & ‘Answers’.
• The integration of Emesent & Pointerra 3D. This will fuel Commercial opportunities with a leaning to ‘Analytics’ and ‘Answers’
• Successful POC with Velociti & Amazon which will culminate in an impressive Scale-up.
• Pointfuse Integration. A key milestone in the Company’s AEC strategy.
• FPL moves to a Full-Suite Subscription, this a natural extension following a number of successful PAID POC programs. Will extend to include a Vegetation Growth model and POC (FPL Parent), targeting operationalization by End CY2023.
• FPL’s Advocacy provides a valuable ‘blueprint’ for scaling other investor owned Utilities, driving faster onboarding and lower cost of customer acquisition.
• Expansion of Services to Tier 1 Mining Companies, where 3D Point Cloud data acquired via Slam Lidar in GPS denied underground environments. Again, a POC process and then scaling, a vast opportunity for each Mining Group.
• The capability developed for the Transport sector (Road & Rail) has been further validated by the Award from Main Road, Western Australia. Another endorsement, which now allows Pointerra to target new geographies, incl. Europe, the UK and the USA.

The above says to me the Thesis is very much intact, the growth story is alive and well and the momentum is set to continue.

Looking at the ‘Poor’ Customer Receipt number, AUD 1.9m is less than half of what I expected (AUD 4.0m to AUD 4.3m). The Company have cited program delays by some USA customers impacted Invoicing and Cash collections. Given this pertains to a single QTR, we need to accept that this was unforeseen. Unfortunately, anything causing a delay to invoicing will show up again in the HY Financials later this month.Most likely why the Company suggested we would see a rebound over the next two Qtr’s (Q3 & Q4).

Before commenting on the ACV saga, would like to highlight an area of concern. A pattern is emerging which centers on the back end of the sales process, this being to collect money. In FY 2022, we had an impairment of AUD 1m, where a customer did not meet his obligation, was freed of that obligation and according to the Company, remains a customer. In Q4 FY 22, the Company reported Customer Receipts of AUD 1.66m (Poor), qualifying that Accounts Receivable totaling AUD 2.54m would have otherwise contributed to a net cash inflow from Operating activities for both the QTR and the FY2022.

In my opinion, time for Pointerra to employ a Financial Officer who is held accountable for delivery on this front. This is directly impacting on Investor returns.

Now, a brief comment on the much discussed disconnect between the reported ACV (in US $) and the Customer Receipts or Revenue. If we consider that Pointerra alone selected ACV as a preferred measure for their business. They then established the criteria / rules to account the ACV number. All self-determined. They keep on citing examples of why the disconnect is amplified eg takes time to get the data etc etc. The Company has several years of history. Apply factors to the numbers based on real-time issues and history. They could do this openly with shareholders, analysts etc. A ‘once off’ step-change and fixed forever. I know of more than one Adviser who will not touch Pointerra for this very reason.

Seen a couple of comments suggesting the Company ‘sneakily’ left out the graph reflecting the cumulative QTR-on-QTR Cash Receipts. Just like to remind those that the ACV features on that graph. That has not been declared yet and maybe the reason behind this.

And finally, will we see a CR given the low cash balance? Ian has again made mention of ‘continued self-funding organic growth’. I personally applaud him for the fiscal discipline applied over 3 years. 

I was looking out for the R&D Rebate in the Cash Flow summary. I maybe wrong here, but looks like they opted for the Tax offset option. What does that tell us in terms of the need for Cash?

Keenly await the HY results.

RobW

With an interview scheduled with Ian Olson later today, thought I would share my updated trajectory analysis which depicts 'healthy' progress across the business. 

The disconnect between ACV ( converted to AUD) and Revenue & Receipts continues to get a lot of air time on various media platforms. In trying to rationalize this, a lot of the discussion centres around billing and payment terms and the Company's messaging that due to different payment cycles, they expect this divide to close. Scrutiny of their Avg Debtor days does not point to anything untoward.

My take, which is different, is that we have a Company which is in pursuit of rapid scaling but subject to some interim delays (post contract award) associated with strategically driven customization. Pointerra started with an innovative core capability. They then enhanced the power of analytics, and continue to do so, and more recently they expanded the value proposition to include answers. 

Rapid Scaling ( Market Penetration) & Customization would normally sit on opposing ends of the spectrum (as a contradiction) in any Sales strategy. But in Pointerra's case, the economic dividend comes from reaching that point where the cases and 'fruits' of customization can simply be replicated for new custom. Best example of this would be, following Hurricane Ian, is the tailored solution (the capability) installed at Florida, Power and Light ready for use by any other Utility Company in the USA. "Answers" inside of 48 hours !!

Not suggesting that there are not other contributing factors to the ACV / Revenue divide, but believe that the above plays a material part. @Strawman, maybe you can tease out what really sits behind the disconnect. They repeat the same point each quarter about different payment cycles and it's not gaining any credibility. Should point out that with the recent AUD weakness vs the USD, the currency converted Annual Contract Value, using the last declaration (31 July) now sits at AUD 30m. FY 2022 Sales Revenue AUD 10m.

Getting back to the trajectory analysis, the slide which depicts Revenue per Employee highlights what I regard as a current 'pain point'. Througout the last year we have heard about new hires, the additional resourcing through the Airovant acquisition and yet the the number of full-time employees remains the same at 31. Does this point to employee initiated churn or the fact that the Company is having difficulty finding the right quality of employee (Company initiated churn). I refer you to Ian's comment in the Annual Report under 'Outlook for FY2023'

" Success will likely result if we are able to focus on the biggest drag on growth – identifying, onboarding, nurturing and retaining exceptional people.

The absolute irony of scaling a cloud platform business is a magnified reliance on the need for exceptional people to conceive, build and sell digital twin solutions to our customers and prospects across the Company’s key target market sectors."

Note : All numbers used in the trajectory analysis exclude once off type items of spend plus items such as share based payments etc. Reason for excluding R& D Income and Spend in the one graph is that it provides me with a different and valuable perspective on Financial progress. The Slide which tracks R&D Grants is earmarked for Vertical (x6) Analysis or hopefully Cohort Analysis if and when the Company report these numbers.

Jayze87

The R & D Rebate for FY22 should alone take care of that. The question is whether we will be materially EBITDA positive. NPAT positive ??? Be very close IMO.

Whatever the case, strong momentum going into FY23 and believe we will have a stellar year. A 'tipping point' that is sustainable looms.

RobW

Afternoon All

First thoughts, Sales Revenue light but OPEX containment  surprised (particularly given the increase in headcount),  encouraged by the build on both Receivables & Deferred Revenue and have a question on the ratio of Govt support for R&D versus the R&D spend.

I have attached a copy of my investment dashboard which signals where we are at in the journey. The old saying , " a picture is worth a 1000 words". By reflecting ACV as the 6 month equivalent of the announced number, we get to view the Half Year achievements in a more meaningful way.

The trajectories speak for themselves. Interesting 6 months ahead of us.

Rob W 

Review of Pointerra's latest 4c and ACV & Market Update

Key Takeout

* ACV reported as USD 9.8m (translates to AUD 13.2 m, a whopping 224% above the Total Customer Receipts for FY 2021). Signals what will eventually find it's way to the Income Statement.

* The Airovant acquisition contributed to an uplift in the declared ACV. Declared Annual Turnover expressed as an Avg over past three years muddies the waters. Anybody's guess what the carry is. All about Resources, IP and shared vision IMO.

* The stand-out in the narrative

...." Whereas ACV growth throughout CY 2020 had been dominated by the US Utilities & Mapping sectors, the past two Quarters (H2 FY21) has seen broader adoption of Pointerra's solution across most sectors and also reflects investment by the Company in new BD and Sales Resources focused outside the Utilities and Mapping sectors"

All adds to the Growth story and will further underpin momentum going forward.

* Successful completion of the platform evaluation by Eversource Energy and now moving into full enterprise deployment. A year ago, the Company spoke of the prospect of contracts ( 7 digit). Eversource clearly would be such a prospect. Believe the Company have shifted to a 'land & expand' model, so IMO we can look forward to a material increase in platform usage by Eversource ( similar to the build of Rev via P, G & E as witnessed this past year).

* The launch of Pointerra's Utility Explorer (including Asset Explorer and Risk Explorer) demonstrates the extension of the value proposition. The provision of enhanced Business Intelligence which simplifies interpretation , facilities risk identification and supports decision making not only creates competitive advantage but will support Customer Retention. Talks to all levels in the Customer organisation aimed at steering decision making. 

* During the QTR, the Company had it's first win with 3 D Insights. Ian Olson is on record as saying that '3 D Insight' could grow to become bigger than the Pointerra as we know it today.

And now to the numbers...

* Cash Receipts for FY2021 reported as AUD 4.071 m, where

  - H2 FY 2021 127% higher than H1

  - Employee related expenses in FY 2021 likely to lift to 70+ % of Total Operating Expenses ( 63.1 % for FY 2020)

  - Despite an increase in Full-time employees Year-on-Year from 12 to 26, Total Cash outflowsfor FY 2021 came in below AUD 5 m ( increased by 52.4% YOY, but a mere 6.3% when comparing H2 vs H1). This signals attention to cost containment or better described as a 'measured approach' to cost management.

* As the Pointerra accounting structure is uncomplicated, where Income is dominated by Sales Revenue and R & D rebates / Govt Grants and OPEX is dominated by Employee expenses and R & D expenses, using that gleaned in the recently issued 4 C may serve as useful indicator of what income will be declared later this month (FY Financials).

A 'Quick & Dirty' formula of 

Sales Revenue less Receivables should 'near' equal Customer Receipts.

Given that Receipts increased 127 % in H2 vs H1, think we can safely assume the Receivables number for FY 2021 will come in north of AUD 0.8m. The Customer receipts were reported as AUD 4.071 m. Equates to a Sales Revenue number of AUD 4.871 m .

* Pointerra currently achieve a Gross Margin above 90%. Looking at the increased investment in R & D during FY 2021, expect the rebate number will be north of AUD 0.8m 

This puts us firmly in EBITDA neutrality or EBITDA profitability territory. What a base when you consider the latest ACV number, the new avenues to add to the ACV number.

In closing, we have one Risk which has surfaced and needs to be monitored. Pointerra has followed a Partner route to support growth. Believe Aerometrix were such a partner a year back. Watched a podcast recently where Mark Deuter, CEO of Aerometrix indicated they are building out their core platform of data capture to include data processing and data analytics. So an in-house AI Analytics capability.

Competition will inevitably arrive in various forms. Pointerra have patents and are still building their IP. Huge market for many to succeed, so nothing more a case of monitoring.

There is another ' Operational Leverage' story about to unfold

Rob W

Afternoon All

Herewith an extract following a bit of analysis on Pointerra (originally shared on HC), which may be of interest to some.

Whilst the market has regarded the latest ACV update as disappointing, there is IMO a lot to be excited about. Few will knock Pointerra as lacking 'growth' potential. The conversation is all about Valuation. I suspect had the ACV come in north of USD 8.5 m, all would have been good. Up until the end of January,  ACV was  'front and centre' in terms of depicting the growth, with quarterly cash receipts somewhat lagging. The recent quarterly showed somewhat of a reversal with a step-change in Receipts and a slower increase in ACV vs the previous quarters.

This analysis is based on ACV remaining the lead indicator.
Not sure how many are considering the likely Full Year 2021  result ( 30 th June FY close a mere 7 weeks away).I believe we now have enough information to extrapolate both the likely Income, likely Expenses and arrive at a rough estimate on EBITDA for FY21. 

Herewith some key ratios which to my mind support the fact that we are fast approaching a key inflection point which embraces growth in INCOME , growth in capability (with a corresponding expansion of SPEND) which should result in sustained investor confidence wrt financial performance.

Note : Period of Analysis spanning FY18, FY19, FY20, H1FY21 (see below)

Income (incl. R&D Rebates) : AUD 0.84m > AUD 0.936m > AUD 1.92m > AUD 1.594m (6 months)

Gross Profit : AUD 0.786m > AUD 0.907m > AUD 1.774m > AUD 1.463m (6 months)
. Note : Gross Margin consistently above 92%

Expenses : AUD 2.319m > AUD 2.749m > AUD 3.505m > AUD 2.472m (6 months)

EBITDA : - AUD 1.533 > - AUD 1.842m > - AUD 1.731m > - AUD 0.878m (6 months)

R&D Rebates/Grants as % of Income : 62.8% > 52.6% > 36.0 % > Not yet declared

Employee Expenses as a % of Total Expenses : 60.7% > 64.5% > 85.5% > 68.3% (6 months)

Deferred Revenue : AUD 0 > AUD 0.283m > AUD 0.811m > AUD 0.653m (6 months)

Note : Whilst not associated in any way with ACV or EBITDA near term, values becoming material for any longer term projections

*******

Time to get back on point. Together with the knowledge that the Company has and will continue to increase it's headcount in support of growing sales and that Employee Costs dwarf all other expense items, a casual look at the trajectories (see above) on Income & Spend would suggest reaching EBITDA neutrality is highly unlikely in the near term.

Companies all use different measures to provide confidence on Future growth in Financial Terms. Contracted ARR would be considered the 'holy grail'. Total Contract Value (TCV) provides contractual certainty but the waters are often muddied by variability on contract duration.

Pointerra have chosen to use Annual Contract Value (ACV) which is generally not backed by a contractual commitment, but rather Pointerra's assessment of customers who reliably present as continuous users of the platform (via agreement opposed to contract). I suggest you refer to Pointerra's response to the ASX query back in February. The Company provided a framework which reflects the discipline/s applied in determining what can be considered as true ACV. 

Now let's have a deeper look at the likely EBITDA number in the FY 2021 Financials.

The EXPENSES came in at AUD 2.472m for the HY. We know the Company are hiring, so let's apply a 50% increase to the H1 spend, that is for H2. Equates to a FY est. of AUD 6.18m (an increase of 76.3% over FY 2020).

Looking at the INCOME  side of the equation, we have already banked AUD 1.594 m at the HY, with a Gross Profit of AUD 1.463 m. Rather than think of the HY on HY growth as a % in order to arrive at FY est., let's go the 'FACT' route IRO announced ACV and relevant reporting in H2, which is material (and certain). All designed to be conservative. 

On the 26 Nov 2020, the Company declared the new ACV number as USD 5.82 m. On the 29 Jan 2021, they increased the ACV number to USD 6.88m. So, let's say USD 6 m at the HY. Using an ER of 0.75, translates to AUD 8 m. Let's apply half of a year equivalent for H2 ie AUD 4 m. At 93% Gross Margin, we have a gross profit of AUD 3.72 m.

Now add the H1 Gross Profit of AUD 1.463 m and our theoretical Gross Profit number as an estimate for the Full Year lifts to AUD 5.183 m.

Not finished. We know that PG&E have increased their spend from USD 35 K pcm to USD 80 K pcm, reported end Jan 2021. Assuming ramp up to new level took a while, let's only count 4 months in the Half Year. Therefore, USD 180 K ( translates to AUD 240 K). Equates a Gross Profit of AUD 223 K.

And the last addition. The Eversource paid 'Proof of Concept' trial would not have been counted in any ACV declarations (given the disciplines on ACV determination). Reported as USD 600 k spanning four months. Let's trim that to 3 months to again faciltate any delays. So, USD 450 K which converts to Income of AUD 600 K with a Gross Profit of AUD 558 K.

Now add up the Gross Profit and guess what, we are up at AUD 5.96 m

In theory AUD 220 K short of EBITDA neutrality, this essentially without counting the impact of any ACV updates released in H2 of this FY (except for the increase in Spend by PG&E). So,  no provision for the annual R &  D Rebates which will be claimed 30 June ( likely to be well north of AUD 700 K), any new business and/ or any expansion of use by existing customers.

Interestingly, if you have a look at the prior depreciation and amortization + the intangible asset balance entering FY21, the road to Profitability (before Tax ) may arrive sooner than we can imagine.

This is already a book, but I think it is important to realise that we wont necessarily have a cash cow from H2 CY 2021 and beyond. The hiring will continue with headcount likely to exceed 40 come Calendar year end. I trust that Pointerra will be measured in terms of beefing out the capability (Spend) ensuring that it produces a very satisfactory and timeous ROI via commensurate Gross Profit.

Based on the above, confident we will be EBITDA positive @ 30 June, that is for the Full Year FY2021. If not, I may be under-estimating the costs associated with increased hiring  OR would present a question on the integrity of the declared ACV. 

I invite / welcome comments on any flaws in the logic and of course, any other comments. Someone once said to me................

..." anchoring your thoughts on the prevailing share price is bad for your health". In light of the above, cannot think of a better time to ignore the market reaction. The spoils are IMO just around the corner. 

As always, please DYOR, Rokewa

Rob W

Delighted with the market update and 4 c yesterday. Considering where this Company is in it's life cycle, reporting 72% Revenue  growth quarter on quarter provides not only a confirmation of market traction, but endorses the value proposition. Few contest the market potential for this business and IMO, above all, their value proposition will underpin future success. What's more, too early for the Company to provide any meaningful cohort analysis, but confident that growth via new signings will be materially complimented via extended usage by previously onboarded customers. Reminds me a bit of the PushPay growth story.

For those that have watched the various Ian Olson podcasts, this is not someone who will be employing new people for the sake of it. Staffing up to 19 people according to yesterday's report, so still 'lean & mean' in my book. Revenue scaling  is happening right now and already the trajectories are looking super impressive. Given this is a high gross margin business, I am very confident that this Company will become highly profitable. I have the patience to match (without anchoring my thoughts on the prevailing share price).

May be in a position to have a first go at a 12 month forward valuation when they release their half year results in Feb 2021.

RobW