#FY21 Results and the Path Ahead
Highlight numbers;
- Revenue up 111% at 30 June 2021, since 31 Dec 2020.
- Freemium sub’s up 400% at 30 June 2021, v 30 June.
Adveritas shows progress in the last year but is it the commencement of a nice run up of converted sales or continued struggle to meet the expectations set by their own hype?
Welcome to my TedTalk.
Originally I approached this in a positive / negative list form but each point raised generally had both a positive and a negative to it so instead I’ve just gathered my thoughts below for some consideration.
Freemium
There’s a lot of talk on the conversion of Freemium customers to paying ones. Ultimately business is business and if they are making money out of this then all the better. I’d like to understand what the long term future for this section of the business would be.
Is there real expectation that they can continue to get people signed up to the free offering and then convert a decent portion of them to paying customers?
I would assume if the business starts to exceed at the larger ends then this section of the business would fade as they won’t need to offer a free sample to prove the need for their product.
Google Market Place & The Multi-Nationals:
Initial agreement signed with promises of revenue to come. Good to get the foot in the door but the take up / sales of the product will be interesting to watch.
As much as an explosion of sales would be welcome I’d imagine that the product needs to prove itself over time so the excitement of the big sales may take a while to get there.
Also the growth between companies owned by the same overarching company may be a slower burn than expected. Just because the left hand has learned a trick doesn’t always mean the right hand picks it up.
Employment Costs:
They spend a lot. $6m this year. Somewhat similar last year (taking into account ‘voluntary pay reductions’ during the covid period to help the company out).
They are also still banking Covid stimulus and Grant money. When that stops, the gap to breakeven becomes that much greater.
The company calls out that they pay market costs to get the best talent to drive the best outcomes for the company. When the sales follow the approach is supported. When they don’t, not so much.
Thoughts on the future:
- AV1 are well positioned to start generating sales and proof of product across a good mix of perspective clients.
- The nature of their product, I would assume, can bring great value to any company that hands over cash based on data provided to it. However I would further assume that larger organisations who want to purchase this product would want to see a nice, long, deep data set that shows how this product can reduce their risk. This takes time. Yes they’ve started but it would need exposure to larger customers, to influence other larger customers to engage them. A bit Catch-22 but accurate regardless.
- The employment costs and generally outgoings are going to catch up with them, I believe, before their sales cover the gap. They’re committed on the path of paying the premium to drive their sales. Not a wrong path but one that will likely need a cash injection before those sales start to outstrip the costs.
I believe the company have great opportunities to prove to the market that their product is as good as they claim.
I think it’s going to need more financial support from the market to get there.
They still have all the other risks to conquer to reach success but have my support in the short term.
Based on the above I don’t believe there will be substantial movement in the SP until the sales pick right up and I don’t think that’s going to happen before they need to go to the market for more support. 2 years is my guess until this starts to move.