8Common is well covered by some of our awesome tribe here, so no need for a deep dive. Thought I would put my 2 cents on the table quickly though, because; why not? 

With the stock down 55% this year, and down nearly 90% from all time highs, I’m not surprised to see many sell down this one in the wash of tax loss selling season. But is now the time to sell? 

There’s one big question in my mind for 8Common at the moment can outweighs the others: Can they get to cashflow breakeven without raising again?

The chances are slim. Very slim. 

In the last 4C a few months ago, they had 130K only left in the bank. But we all know of course that the 4th quarter tends to be a strong one, as evidenced by the last 2 years. So, there is a chance this 4th quarter is cashflow positive, and the bank balance gets further in the black. Where to? Not sure. Maybe they can bring in as much as $300K, maybe more, maybe less. In any case, we also know they incur upfront costs to onboard users onto the expense management platform before billing them. So, there’s a fat chance a positive bank balance starts to deteriorate in the quarters of next year, and they start digging into the director’s $1.5M loan. 

In the last 4 quarters, they’ve burned FCF of $1.6M. So, If they do indeed build the cash cushion this quarter, and we take the $1.5M director loan, we’ve got 1 year of runway. Which could be enough. Unlikely, but could be. A CEO’s first job is to never run out of cash. So you wouldn’t want to be chancing it with a bank balance of $500K. Which means there’s a risk of dilution with this one. 

All this said, my opinion at the moment is that current valuation, coupled with near-term growth that’s nearly secured, makes the opportunity appealing for a small position for me. 

Strong Year for 8 Common: A Closer Look at Their Financial Position

It's evident that 8 Common has had a strong year. This is now ‘common’ information.

Their ability to execute on closed contracts is commendable and instills confidence in their prospects for the upcoming year.

However, while the overall outlook appears positive, I maintain a sense of prudence with these guys. Specifically looking at cash reserves. 

It's worth noting their significant improvement in cash management and their efforts to reassure investors with statements like:

"With a growing user base and heightened activity, alongside reduced development and implementation costs related to the GovERP technology startup, our company anticipates moving towards positive cash flow in FY24. With over $1.8 million in cash on hand, we remain fully equipped to drive this growth."

Yet, I’m still not 100% sold on the ‘fully equipped’ dream. 

Why? 2 things:

1. What transpired in Q4 cannot be simply annualised; government customers tend to pay predominantly in the fourth quarter. Hence, it's plausible to anticipate more quarters with cash burn, and it wouldn't be unreasonable for them to consider raising funds once again to ensure a more secure path towards sustainable cash flow.
2. They’ve done it in the past. 

Holders, am I missing anything? Who’s got a differing opinions on this matter?