Just saw the news this morning that EVS are merging their water products in under Industrial.

While I can see the synergies from a GtM perspective and hopefully they have a reduced cost of sale overall, it will be a shame not to be able to track Water's growth independently of the other product lines.

Albeit off a small base, my investment thesis has been that Water is the wildcard in the portfolio with potentially very large growth driving the future of this business.

• Aviation doesn't feel like a growth business (and frankly, I'm a bit sick of the moaning about the "one off churn event" as churn is a reality in ARR businesses that has to be expected and growth needs to cover for it).
• While Industrial is growing nicely, the challenge with that business seems to be the impact on metrics (shift in margins) as EVS are needing to borrow money to finance a bunch of site instruments rather than a pure software sale. So more and more I suspect that part of the business will put negative pressure on gross profit (and eventual earnings multiple once this company has more reliable profitability).

Latest sales update looks promising

https://envirosuite.com/insights/news/fy24-q2-sales-update

I’ll be interested to understand how much of these new sales are the “sell through” PPE (that I seem to recall was going to grow with debt funding) vs higher margin software revenue. I’ll be interested to see this when they publish their first half results which are supposed to be out in late February.

Just went down a rabbit hole on the latest annual report ... (trying to work out my latest valuation)

Trying to work out the negative cashflow -8.052M and get a feel for when these guys are going to run out of money and need to raise more capital. They've only got 8.22M cash so look to have less than a year or runway left. Based on their last raise and burn I'm guessing they are going to be looking for another $10m or so which would be a further 10ish% dilution.

In doing this digging I realised how large an amount of goodwill they have on their balance sheet. In viewing this, they have racked up 66m of retained losses to generate 107m of intangible assets. This seems to be backed up by a DCF model from management.

My key question here is how do these figures compare with those in your DCFs or estimates of value (mid teens revenue growth rate with 12.5% discount rate) that seem to have lead to a consensus valuation of 15c per share?