I am really liking Alcicion as my current best pick of companies that are pre-profit or not yet at positive cash flow.
They have some good reference sites so prospective customers have actual real use situations to look at when making a purchase decision.
Customers seem quite sticky and I expect low churn as it is not so easy to change once you have a system embedded.
From the conference call I took out the impression that growth in expenses should slow going forward and as there is a good pipeline of opportunities new sales should provide a good boost to the bottom line.
With the recurring contracted revenue the company revenue is pretty easy to predict and there is upside potential from any new contracts. Alcidion saw a 36% jump in first half revenue to $11.1m and the great thing is that revenue already contracted for FY21 is $21.7m. Without any new contracts that is already going to be revenue of 17% above FY20 full year result.
If there is continued contract wins and growth in recurring revenue that should see the share price increase over time.
There is $12.5M of cash on hand but I have to consider that there is still a possibility of another capital raising being needed before ALC gets to profitability.
I think a this stage the company is a low risk with a good upside potential. I hold and am hoping for good things over the coming years for this company. Hoping to see recurring revenue growth for years to come.