https://blocksandfiles.com/2024/05/14/google-cloud-unisuper/

good article on the importance of having a third party backup. Stories like this hopefully reduce the risk of Microsoft coming on scene.

disc held

Another great set of results by Dropsuite and appears to be an acceleration on last quarter results which is great to see. One thing that has caught my eye is in the investor presentation they have two slides in the appendix on the Microsoft product Syntex and there own analysis of this. The key point that stood out to me was that DSE offers improved margins for the MSPs who then on-sell their product to their clients. This margin is higher even though DSE product price is lower compared to Syntex.

I do like the fact that management have not hidden from any possible threat rather they are addressing it and making slides for the investor webinar. I do believe there may be some impact but overall minimal impact given that they target MSPs.

DSE also had a low-margin partner churn but still grew overall subscriber numbers impressively. User take up was quite impressive this qtr compared to last qtr. I wonder if the launch with TD SYNNEX was a catalyst to this?

DSE also onboarded there first GovCloud client but no mention of the quickbooks product.

Overall happy with the results and happy to continue to hold.

@Valueinvestor0909

i have no issue with this personally and Chariff has spoken about this previously. He speaks of the importance of staff feeling part of the company and owning a small amount of it improves productivity and care in their work.

you could also argue it helps maintaining staff and not losing valued staff members if they feel they own a part of the business.

although it may seem a lot of shares if they hit those targets for staff who have hung around for 12-24-36 months then I am a happy shareholder. DSE have had these performance rights issued previously and have hit those targets specified.

disc - held

https://neke86.substack.com/p/dropsuite-asxdse?r=25g74b&utm_campaign=post&utm_medium=web

worth a read. Neke86 on twitter is worth the follow.

I hold IRL and SM

@Noddy74 Constant currency to me is that they report in the same currency no matter the currency movements.

if DSE really wanted to be a little sneaky they would report the finances especially on the quarterly activity report in AUD where the statistics to the unknown would be far more impressive looking.

for example instead of reporting 11% increase in USD they could report 16%. Historically DSE report in USD and I guess the constant currency is they continue to do this.

all up a really impressive result. The one thing that stood out to me is that DSE are growing staff numbers in a time where many are decreasing numbers. They are growing the business at a solid rate and expanding in marketing and staff whilst executing on what they said they would do.

I note that there were not due diligence in the financials but did mention that they aim to make an acquisition by 2022.

lastly new product launch at the end of October hopefully further increases ARR in the future.

like clock work for DSE. Another fantastic quarter.

Highlights:

• ARR of $20.1m up 13% QonQ and 68% pcp
• normalised cashflow of 0.40m
• users increased 78k to 808k up 11% QonQ and 56% pcp
• monthly APRU up $2.07
• product margin maitained at 64%
• churn remains below 3%
• 21.6m cash on hand
• FY23 guidance of positive cashflow reiterated

another positive is that DSE was ranked 1st for the 3rd conseutive year for their email and backup solutions in ifotech's software reviews.

outlook: was also positive, expected to continue to deliver strong recurring revneue with industry tailwinds to continue.

I am really happy with the report and the thesis of around 15% growth each qtr being very consitent. I note there was no due diligence expenses this qtr so they must still not have any serious M&A in sight. The Ceo has suggested any M&A that takes place will be accretive. Interestingly in the outlook he did suggest data protection so perhaps this is a hint of what they are looking at which would make sense.

DISC- Held IRL and SM

Another solid result for Dropsuite.

highlights include

• ARR of $17m another 15% increase on prior qtr and 71% on PCP
• users increased 81k to 730k up 13% on prior qtr and 55% on PCP
• monthly APRU of $1.95 up 2%
• gross margins of 63% with improvement expected
• cash receipts of $3.72m or 9% which is lower than i was hoping.
• $21.1m cash on hand with the purpose to acquire something shortly
• churn remains low at <~3%
• bolstered the senior management team which shows confidence in the product and the goal of ongoing growth
• DSE is cashflow positive however due to a number of one off payments dipped into negative this qtr. these payments include insurance renewals, annual bonuses and other subscription services. They reaffirm positive cashflow outlook for FY22

Overall a solid result and I will continue to hold. Still waiting on any M&A opportunities that the company takes on with the cash on hand from last years CR. Investor webiner with CEO is tomorrow.

DISC- held IRL and SM

Dropsuite release another cashflow positive quarter and maintain ongoing growth.

Highlights

• ARR of 13% QoQ to $15.2m (70%YoY) (my calculations however are 16%)
• positive operational cashflow of $0.23m
• users increased to 649k up 13% QoQ (51YoY)
• monthly APRU of $1.95 up 3% QoQ
• $21.6m cash for acquisitions from recent CR
• churn ~3% (stable)
• cash receipts 3.42m (increase 20% on prior qtr and 102% YoY)

Further announced increased functionality to Microsoft's Team product, as well as receiving SOC-2 certification which enables them to play in the space dealing with larger clients.

One of the interesting announcements in the report was that they launched the integration with autotask, one of the world's largest Enterprise Resource Planning systems for MSPs. This deal enables thousands of MSPs to offer DSEs product solutions to their end user clients. So it sounds liek to me this deal expands opportunity to new clients and hopefully will increase user numbers.

Gross margins did decrease to 62% from 64% but this was due to the company adding further storage capacity across all data centres to manage increases in storage from new user growth and higher APRU products. Mgmt expect it to stabilise here for the short term.

Outlook:

• expect ongoing growth from current partner base and the pipeline of new partners. I will likely want to know what this pipeline looks like. Management continue to suggest that strong marker tailwinds in the industry and going to continue for the foreseeable future.

DISC: I hold IRL and SM

Dropsuite provide another strong quarter of growth.

Highlights:

• ARR of $13.1 mil a 14% increase QonQ and 81% YonY
• users up 11%to 575k
• monthly APRU of $1.90 up 3%
• cash receipts of $2.84m up 18% QonQ
• EBITDA positive quarter 
• cash in bank of $21.4mil

all metrics have moved positively now for 9 quarters in a row, churn sits at <3%. Gross margins at 64% down slightly due to increased costs in adding storage capacity in all data centres to manage additional storage costs requirements from higher APRU products and higher growth forecasts but this should settle and move closer to around70%.

DSE expect ongoing tailwinds to benefit the business. They completed a CR this quarter and will look at M&A opportunities which will assist with growth. They should also complete the SOC-2 which takes one year in this next quarter and enables them to go or at least be a player in the large government contracts. I suspect any M&A opportunities will be related to the completion of this and enable DSE to get their foot in the door in this area. 
 

DISC- hold IRL and SM 

Another fantastic result from Dropsuite.

ARR of 11.03 (15% increase QonQ) growing 82% PCP,

Users are now at 518K up 10% QonQ

Monthly APRU continues to grow and they are now basically at breakeven.

continues to have 2.4Mil balance sheet in which the CEO has alluded towards possible M&A activity to expand growth.

Pleasantly DSE was again rewarded with best in class product following a survey now 2 years in a row.

Strong tailwinds with the switch to cloud will continue.

Founder and CEO led company with a lot of skin in the game.

I continue with my valuation of 30c.

Shaw and Partners initiates coverage of cloud-based solutions provider, Dropsuite with a Buy recommendation and a target price of $0.28.

Dropsuite operates in the Backup-as-a-Service (BaaS) market and distributes via its 300-plus Channel Partners to over 430,000 users across North America, Europe and APAC. The company delivered $8.5m in annual recurring revenue (ARR) at December 2020 (up 62.5% YoY or +77.8% YoY constant currency) and plans to propel growth further through extending product functionality and entering new horizontals.

The broker is impressed by Dropsuite’s growth across its suite of key metrics, and notes favourable industry dynamics and product expansion opportunities.

Dropsuite is trading at a historical EV/ARR multiple of 11.7x, which represents a -26.9% discount to the peer group’s latest average historical EV/ARR multiple of 16.0x. However, the broker notes Dropsuite is at an earlier stage of revenue generation and sales cycle conversion than the selected peers.

Shaw and Partners expects Dropsuite to continue investing and reaching profitability by FY22 across an accelerated growth profile.

Disc: I own 

Bull case for DSE

Dropsuite is a cloud and data backup SAAS business.

I will make a number of dot points to explain my bull case

1) DSE has had 6 straight quarters of ARR increase

2) subscribers are nearing 400k and this is the area of expected break even 

3) CR completed in March and all directors purchased there maximum allocation of shares allowed $30,000 worth. This was done at 4.5c. The SP is now 16.5c and still no selling has occurred. They are cashed up with ~3mil in the bank and are very diligent with cash. This should get them to break even.

4) a private company Topline capital has been accumulating shares in DSE and now own ~17% of the company. I expect they are targeting 20%. 
5) I see DSE as a possible TO target at this price 

6) DSE has great reviews it is one of the preferred products for email and website backup has won awards and a survey suggests 97% of people who use the service would recommend the products to peers.

7) DSE products is now worldwide in use and is constantly winning partners to expand their product.

8) CEO founded and leads the company. Has a long history in the area and has worked for google prior to this. 

I see DSE still cheap and the CEO seems bullish on the next quarter results suggesting they are strong in a recent announcement. I see this company reaching 20c in the near future.

one risk that has occurred in the past is companies potentially developing their own in house products and therefore leaving dropsuite. This risk remains however these platforms are usually sticky and DSE has lowered the amount of reliance on the top 10 customers. Top 10 use to be 90% of revenue whereas this now sits at 70% and is lowering each qtr.