$DUB released its 4C this morning.

Their Highlights

● Revenue of $9.8m in Q1 FY24 up 10% on Q4 FY23 and 46% on Q1 FY23.

● Run-rate of $5m quarterly cash savings from FY23 restructuring programme achieved in the quarter with operating cash costs including finance lease repayments1 of $17.2m in the quarter, down 8% from $18.6m in Q4 FY23.

● Net operating cash outflows including finance lease repayments1 of $8.2m in Q1 FY24, down 3% from Q4 FY23 and down 20% on pcp.

● Operating cash receipts for the quarter were $9.0m, down 12% on Q4 FY23, and down 5% on pcp reflecting expected seasonality.

● Capital raise undertaken raised $9.1m (net of issue costs) in the quarter.

● Cash on hand at 30 September 2023 was $33.7m.

● Deployment of Dubber Moments (Artificial Intelligence) solutions to customers underway in the quarter.

● Dubber Moments recognised as ‘Best AI Product in Telecom’ at prestigious CogX awards.

● Cisco Foundation programme moves to advanced revenue tier due to increased uptake.

● Continued market penetration with new network agreements signed across the Americas, Europe and APAC in the quarter, with 210+ Communication Service Providers agreements in place at 30 September 2023.

● The Company reiterates its previously advised expectations for FY24 of revenue of $45m and costs of $65m (excluding share based payments, goodwill impairment and FX gains/losses). 

My Analysis

This is a business that has been working hard to rein in its costs, and working to maintain revenue, with receipts largely flat over the last 6Q.

The CF trend analysis below shows just how hard CEO Steve McGovern has been working to turn the ship around.

And with $34m in the bank, and now four successive quarters of significant improvement in cashflows, the business is on track to achieving a more sustainable footing later this year.

It's not for me, but it will be interesting to see how they fare, and to see what level of revenue growth they can achieve once the business is right-sized, given that investments have been throttled right back.

Disc: Not held

$DUB released their 4C today;

Reported Highlights

• Operating cash receipts for the quarter were $9.5m (up 42% QoQ).
• Operating cash costs increased by $500k in the September quarter to $20m.
• Net cash operating outflows were reduced by $2.5m compared with the June quarter.
• Cash on hand at 30 September was $73.8m. Dubber is fully funded to operate cash flow break even.
• Revenue was $6.6m (down 3% QoQ, up 10% YoY).
• Dubber extended its Service Provider footprint with commercial agreements with Ziggo (Vodafone Netherlands), 3 (UK) and NTS (USA).
• Dubber was accepted for the ‘IP Co-sell’ programme with Microsoft

My Observations

They've toned down and removed several of the previously reported growth KPIs

Revenue declining vs. last Q and up only 10% on PCP

Working hard to manage cash out flow (see trend graph below)

"Dubber is fully funded to operate cash flow break even." - Really. I'm not so sure.

I'm no longer following this as a serious candidate for investment - more out of interest as a case study to observe how firms are managed when they realise they can't make money and how they communicate with remaining shareholders. (I could be wrong)

Disc: Not held in RL and SM

@Rocket6 and @Hogajo , Owen Rask agrees with you ... see his tweet from this morning. Pretty strong!

https://twitter.com/OwenRask/status/1564497589797408769

I held $DUB between Oct-2020 and May-2021 as the story, the tech and the growth appeared impressive.

But like with so many tech platforms, the thesis rests heavily on the ability to scale profitably.

By tracking operating cash outflows, it became clear to me by May-2021 that there was no operating leverage showing through. Now from 1Q20 through 1Q21 operating costs were reasonably stable and, certainly, receipts and related metrics were growing rapidly. However, as acquisitions became an ongoing part of the story, the trends turned negative, and I was fortunate enough to bale out before the market cottoned on more generally.

It's been on my watch list ever since, but with each quarter, the negative trend extended, so its showing no sign of ever graduating off the watchlist.

(I think I have seen Claude Walker use the term "cash incinerator" recently, but I don't recall which stock that was in relation to.)

Disc: Not Held in RL or SM

Note: "Payments" in the graph below relates only to this payments in the 4C above the OpCF line.

Just to reinforce/ add to @Valueinvestor0909 commentary and analysis, I've also updated my 4C analysis - look at the trend of the dotted OpCF line - continually heading south. There might be a "value proposition" here for customers, but I can't see one for investors.

What is terrible about this is that investors are given no clue of the underlying economic problem in this firm from the Company Results "Highlights". This is another company where it is possible to argue that the Board of Directors could be accused of misleading investors by allowing the published highlights to go out in the form they have. Each statement is accurate on its own, but collectively, they fail to paint the overall picture.

(Note: I always do the analysis below for pre-profit growth stocks - and I always update my analysis before I read the release. It takes a little discipline but it has saved me a world of pain. Each update takes about one minute's work.)

Disc: Not held on SM or IRL (exited on 3-May-2021; now on watchlist)