The Good

• Increase in positive operating cash flow to $4.9m for the quarter. FCF is still not quite positive due to investing cash outflows of $5.3m. Siteminder is trending well to meet their FCF target by the end of FY24.

• Operating expenses remain flat, so going forward, most of the top line growth should be going to the bottom line.

• $39.5m in cash available as the business reaches FCF positive. Cash balance should improve going forward offering a solid operational buffer for future R&D spend.
• 14 agreements signed on for Channel Plus which indicates there is a demand for the new product. Currently this is running in pilot for Q4FY24 so unlikely there will be any significant contribution from Channels Plus until H2FY25.

The Not So Good

• ARR is up YoY and the previous quarter but still down on Q1. It’s a similar story with quarterly revenue, which has been largely flat for FY24 and still down on Q1. For the company to be close to the targeted growth rate of 30% much of this will need to come over the next 2 quarters.

What To Watch

• Channel Plus and Dynamic Revenue Plus release as per target in Q1FY25
• Siteminder Pay Terminals rollout in H1FY23
• Updates on Little Hotelier Autopay and contributions to increase in transaction revenue.

Watch Status

• Unchanged. Slower growth QoQ but business developing opportunities for FY25 and beyond.

Valuation Status

• No Change

Full Year and 4th Quarter Updates. (A bit late but finishing off the list)

The Good

• ARR increased 15% QoQ to $173.1m. Previously ARR growth had been slowing. Based on this number being “recurring” (even though an increased portion is based on transactions) this puts a floor on a FY24 revenue estimate and would indicate ~14% growth on the FY23 result. This is short of management’s long held 30% target.

• Operational cash burn continues to improve which has led to an improved FCF positive target for H2FY24 from the end of FY24.

• All business metrics continue to improve.

• Additional subscribers adder per half continues to grow. The gross margins are much better for this part of the business (84.1% vs 35.7% for transactions), so this is an important area for the business to continue to perform in.

• Growth has picked up across all regions.

The Not So Good

• Cash reserves down to $51.3m. This will continue to take a hit until FCF positive can be reached.

Watch Status (Trying a new method to be able to better compare ongoing sentiment)

What To Watch

• Ongoing growth in ARR to bring revenue closer to the 30% growth target. ($196m)
• For FCF positive to occur in H2, can likely expect that operational cash flow should be positive in Q1FY24. (Adjusted cash flow was neutral) Not expecting any significant changes in operating expenses.

• Impacts of overall economic headwinds on continued transaction revenues from travel. If spend decreases, growth will need to continue to come from ongoing property additions.

The Good

• ARR growth resuming, up ~5% QoQ. This does need to pick up to meet the targeted 30% annual growth rate

The Not So Good

• Cash receipts down when compared to the prior quarter, which is impacting overall cash flows. “Underlying” cash flow is meant to be an improvement over the past 5 quarters, but there is still a long way to go for the cash flow neutral by Q4FY24.

• $57m in cash / term deposits. With over $11m in cash burn for the quarter, this means that there is barely enough cash available to reach the breakeven target without having to access additional financing.
• $23m in quarterly expenses for staff. This is a pretty high figure for a cloud software company.

What To Watch

• Based on underlying cash flow, can hope to see operational cash burn less than $3m for Q4.
• Growth in Net Subscriber Additions - reported to have increased in Q3.
• Forward booking has been strong for the Northern Hemisphere summer
• GuestJoy to be relaunched in English in February and other languages in Q4 (Carried Over)

@Strawman any chance of getting Sankar Narayan back for another update?