Straws are discrete research notes that relate to a particular aspect of the company. Grouped under #hashtags, they are ranked by votes.
A good Straw offers a clear and concise perspective on the company and its prospects.
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The Good
The Not So Good
Watch Status
Sell
Valuation Status
Increase in the bear case likelihood.
The Good
There potentially has been some manipulation of expenses to reach this for the quarter (prepaid bills from last quarter) but generally the business has been trending in the right direction (slowly)
The Not So Good
Watch Status
Slight Improvement
Valuation Status
Annualised Figures
What to Watch
The Good
The Not So Good
Product Review - Petanet - All Services
What Status
What to Watch
The Good
The Not So Good
What to Watch
The Good
The Not So Good
What to Watch
However there has been a slight improvement in churn rates
The Good
The Not So Good
What to Watch
The Good
The Not So Good
What to Watch
So Pentanet has finally moved to start trying to nudge its users into paid subscriptions for GeforceNow. (See @laoshi's straw) After a year in service they have reached “nearly a quarter of a million gamers”. The number wasn't given this time unlike other announcements.
After pretty lack luster revenue figures for the service announced in the annual report, it will be telling to see if the new tiers can improve the numbers.
Gaming revenue for H2FY22 was $300k, if you take 6 months of full membership ($120) this gives around 2500 paying users. Total user count at the start of the half was 58,000. This then comes out at an estimate of ~ 4% paying users which is flawed as it assumes no additional users started paying for the service during the half, so the number is likely lower. So where to from here?
The price point of the new plans is actually quite reasonable. With the array of streaming services available to people these days, another $20 / month is a solid hit, whereas $4 is much more easy to justify and squarely targeted at someone like myself who doesn’t have time to game much anymore so doesn’t own a gaming rig but still would like to give some of the new titles a go.
What I see that may impact conversions, is the free tier is still available and not limited after a trial period or if they are successful at moving people onto the $4 plan, but then the wait times become significant again and it then forces people off the service rather than up the subscription tiers to skip the wait times.
Given the new pricing has started right at the end of the quarter, there should be a clean set of numbers coming up for Q2 to identify the success of the new subscription tiers.
The Good
The Not So Good
What to Watch
A little bit of a search of current 5G & NBN plan comparisons to Pentatnets freshly announced Nexus offering. At the current promotional pricing it seems that it is a reasonable value proposition, after that period not as much unless you are a user who is after the highest speed internet plans. As this is likely targeted towards gamers, I think that Pentanet may end up bundling Geforce Now with the Nexus internet plans as a bit of a cross promotion.
Nexus
Telstra 5G - Nexus faster / Telstra cheaper but wide speed range
Optus 5G - Nexus Faster / Optus cheaper and includes Netflix
Aussie Broadband - NBN - Speeds similar / Nexus Cheaper
Fornite is now available on iOS and Android through Geforce NOW. Currently one of the most popular battle royal games, it will be worth watching to see if there is any noticeable uptick in users following this update, and if the launch of mid tier plans follows not far behind. (Previously indicated to be Q4 release)
The Good
The Not So Good
What to Watch
Thought I would check out what the ques are currently looking like on GeForce Now after updates earlier this year announcing high growth on the platform.
There's definitely some more friction to using the free service now with over 150 people in line and a 20+ minute wait for time on the server. With the free service limited to a 1 hour session, and then having to re-join the line I think this may convert a few more memberships even before the new membership tiers are rolled out.
It will be interesting to see if there has been any growth in the numbers for Q3.
A bit late to this but still working through the 4C's
The Good:
The Bad:
What To Watch:
Impacts To Price Forecast:
TBC. No price target currently in place.
Announcements Since Quarterly:
I have only just bought into Pentanet and haven’t gone through the process of a proper research and write up so there is a little less context around the recent 4C announcement than normal for me so this will be a superficial look and circle back to this after I have finished my full dive into the company.
Revenue is up 18% QoQ and subscribers are up around 11% QoQ which is ok but given the current market cap a fairly hefty growth rate is priced in.
Customer churn is decreasing and reported at 0.8% but this is a number I will need to benchmark against others in the industry as it is a competitive market.
5GG is cashed up after a recent capital raise so the current negative cashflow is not a short-term problem and operating costs have remained fairly constant over the previous quarter. At the current rates of growth 5GG could be getting close to operationally cash flow positive by Q3.
The item to watch for its impact on the cashflow statement next quarter is the new GeforceNow gaming service which just launched this month. I imagine there is a fairly fixed cost for running the 15 servers regardless of the uptake and there are 15 more scheduled to be installed.
The other key sector of the business to monitor over the coming quarters is the progress of the Nexus Terragraph project, what level of demand for the service there is and how much ongoing capital is being invested for the deployment.
All in all it seems to be a pretty solid update with nothing screaming out that I have made a mistake yet other than perhaps my entry price.
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