FY23 updates highlight

In first half, operationally they were outflow of $2.8m ( which means for full year operational cash outflow will be ~$0.8m)

I think management set expectations of full year cash flow neutral or positive in past few presentations.

Although, the thesis is working nicely ( However, I like management not to set high expectation). Since last five years, ARR has grown significantly and now it is at inflection point of achieving cashflow positive in near future.

ARR Growth:

FY18 : $4m

FY19 : $5.9m

FY20 : $7.8m

FY21: $10.7m

FY22: $18.3m

FY23 : $23.1m

So Prophecy announced today, that it has increased ARR to 13.6m ( at the back of the new eMite SaaS deal).

However, they changed the ARR figure for FY21 in this announcement to hide that Snare's ARR has reduced ( which I knew anyway because Snare's main Managed Services partner stop selling it last year - Although, new Managed Services partner has been onboarded later in FY21). It may take little time to ramp up Snare's sales.

The thesis is active -- both products have significant momentum. However, Management tried to change the figure to show more growth.

Look at the following twitter thread, Company did respond to my initial tweet - I am waiting for their further response. 

(1) Value Investor on Twitter: "$PRO ARR at end of FY21 was it 11.5m or 10.7m ? Which announcement to believe? https://t.co/SYE0GFfoFy" / Twitter

But my confidence in the integrity of Management is somewhat shaken and I will reduce my holding on share price strength. 

Update: 15th Oct 2021

Attended webinar hosted by CEO. Products definitely have momentum and CEO also sounded very driven and focused on growing the business.

I will keep this on the watch for ongoing announcements.

Prophecy agrees to provide eMite to Humana Inc. (NYSE: HUM) for an initial term of 3 years, with a minimum commitment of AUD$1.784M million in annualised recurring revenue (ARR) and total contract value of AUD$5.518 million over the initial term. eMite ARR now exceeds $10 million.

Announcement

Shares on issues : 64m

Insider ownership : 11.4m (17% insider holding)

Market cap  = 35.2m ($0.55 a share)

EV = 33m ( 3 x ARR)

Revenue = 12.8m

Cash = 3.1m

Product set

• SNARE
  • History - SNARE logging technology development started in Canberra by ex-Defence personnel for Australian Defence Department initially.
  • Flexible centralized log Management (CLM), Log collection and Monitoring solutions that complements existing Security Information and Event Management (SIEM) deployments or acts as a self contained SIEM. helps customer for security compliance standards like PCI DSS, SOX, GDPR, HIPAA, NISPOM, PIPEDA and others
  • Snare Central
    • Snare Central cloud log management enables security teams to monitor, process, analyze, and visualize logs in an easy and manageable way from one central location
  • Snare Agents
    • Snare Agents get installed on various endpoints like Windows Servers, Desktops ( Windows, Mac, Linux, Solaris), MSSQL Servers, Network devices like Routers, Firewall and switches

• eMite
  • Real time Analytic solutions for
    • Cloud contact centre products like Genesys and Amazon solutions i.e provides data visualization solution that gives customers full control over their data visualizations with "no code" customization dashboard and wallboards. It can also connect to multiple data sources, like salesforce and zendesk
  • Analytic solutions for Snare Analytics and Snare Advanced Threat Intelligence.

• E-Foundation
  • Legacy software product with few remaining customers. - No further development

Annualised Recurring Revenue (ARR)

eMite Subscriptions $7.6 million

Snare Subscriptions and Maintenance $3.7 million

Legacy Subscriptions $0.2 million

Total ARR $11.5 million