Member Info for LawrenceHut

BAH, Basically, unless Admin expenses go down significantly and/or margins go up for the while installed base, I don't see how they can avoid raising more cash. But again, I'd be happy to be proven wrong and jump back on that train.

But note that gross margin is indeed 50% in year two: revenue is 35K per month and COGS is 17.5K per month. But cash does not enter until Deferred revenue is depleted.

Feel free to let me know if you think my understanding is incorrect.

Andii, it's not. I had assumed it was, but it's not. They say 50% gross margin in year two. Gross margin, not cash flow margin.

Here is an example for 10k devices sent; this is how I understand it. You can easily make an excel table (that's what I did).

70% are installed, so 7K. Let's imagine 50% gross margin from day 1.

month 1:

$600K cash received (prepayment)

7K x 5 = $35K booked in revenue – Ondo still owes 600K – 35K = 565K to the client (this is deferred revenue).

7K x 54 = $378K in CAC

$17.5K in COGS

accumulated cash: 600K – 378K – 17.5K = $204.5K

month 2:

0 cash received

7K x 5 = $35K booked in revenue – Deferred revenue: 565K – 35K = 530K.

$17.5K in COGS

accumulated cash: 204.5 – 17.5K = $187K

etc. until month 13

month 17:

0 cash received

7K x 5 = $35K booked in revenue – Deferred revenue: 215K – 35K = 180K.

$17.5K in COGS

accumulated cash: 12K – 17.5K = $–5.5K – now cash flow negative

etc. until month 17

month 17:

0 cash received

7K x 5 = $35K booked in revenue – Deferred revenue: 40K – 35K = 5K.

$17.5K in COGS

accumulated cash: –58K – 17.5K = $–75.5K – this is the minimum, cash flow becomes positive from now on as Deferred revenue is exhausted.

month 18:

30K cash received (35K revenue – 5K deferred revenue)

7K x 5 = $35K booked in revenue – Deferred revenue: 0,

$17.5K in COGS

accumulated cash: –75.5K + 30K – 17.5K = $–63K

....

month 22:

35K cash received (35K revenue)

7K x 5 = $35K booked in revenue – Deferred revenue: 0,

$17.5K in COGS

accumulated cash: –10.5K + 30K – 17.5K = $7K

Unless the insurer gives another advance to Ondo in Year 2, accumulated cash is negative from month 13 to month 21.

Andii. trading receipts is higher than revenue because trading receipts are a cash movement: they include contracts signed with insurers with a 12-month prepayment, and the "normal" subscription for legacy clients and clients in year 2+, and some other legacy revenue that is paid immediately (like device and setup fees). Revenue is just an accounting number. So if a devices was registered on October 1 as part of a contract signed in July with the Insurer, the trade receipt for one year of subscription will be have been received in H1, but no revenue would have been booked in H1, and 6 months of revenue will be booked for H2.

EBITDA loss coming down is very good. It' s way too high. If they can really contain EBITDA to £5m, that will be really helpful.

Each US device is actually cash flow negative from month 13 to 22 (assuming revenue of $60 per device, CAC of $54 and COGS of $30).

I still don't see how they can avoid a further raise. Unless COGS goes down significantly, increasing gross margin for the existing registered leakbots.

BuyAndHoldd. Indeed, and I'm assuming they had access to the information we have learnt during and after the call.

I'm puzzled.

I don't know which fund it is inside KWI. I have a lot of respect for Symmetry; I know he tweeted about Ondo, so it's probably him.

Intriguing.

Iantobach. Indeed, wow. Very interesting.

Gallmat, I think the management mentioned that and said that leaks constantly appear, so this is not a problem because ROI stays positive for the insurers. Well, I don't have much trust in management at all, but I'm inclined to believe this.

Sorcerer, I agree that generally margins should go up as the density of plumbers go up. From 2027, as the new Leakbot is introduced, general gross margins might drop again as Onod enters into new states. Say you get +5% margin in 2026, that's still only 50K per million in revenue. Not bad, but Admin expense seems to go towards £6.5–7m.

You are probably £2.6m annualized GP, say £2.8m if gross margin on that installed base increases. Still need to find at least £3.7m in cash flow.

They said inventory should be at about £500K, So consider they have £500K excess inventory—add that to cash. But even at 55% gross margin, cash flows are very low in the first year, and still low in year two (less than 10% in Y1 and >20% in Y2).

I think the best-case scenario would be a loan from HomeServe, which would be reasonable if Ondo demonstrate growth is increasing a lot. The most probably still seems to be dilution.

Still, I think the best thing for Ondo would be to negotiate a higher price. $6 per month would dramatically improve the business case for Ondo.

Damned, I don't know what is happening. For a 50% gross margin:

Y1: Gross margin -40%, cash flow margin 2%

Y2: Gross margin 50%, cash flow margin 8.3%

Ondo will need more funding.

Sorry.

I'd add that because of the way their contracts are designed, cash flow margin per device is

GC555, all great points.

I'd add that because of the way their contracts are designed, cash flow margin per device is

Chemeleon1. I'm not sure they should outsource the plumber service; it would reduce margins even further. And that's the core of the business.

Ondo can't grow too slowly, because it's losing a lot of money to admin expenses. On the contrary, it's trying to grow as quickly as possible (I think this is the right thing to do), which is why only 70% of the devices are registered, I presume. Management is happy to pay for growth.

Still here, and as always, trying to share bits that others might not have seen and trying to learnt bits from others that I might not have seen :)

That's correct.

Roughly speaking, for a 10K order, Ondo receives $600K upfront, and it costs Ondo $378K ($54 per device because only 70% are installed).

Only 70% are installed, so cost of service is only $210K at 50 % margin, $164 at 61% margin. Ondo ends up with $12K to $58K.

$180K is deferred revenue.

In the second year, Ondo receives $420K in revenue, but $180K was deferred, so only $240K in cash.

Cost of service is still $164 to 210K, so Ondo gets $30K to $76K in cash.

And then it's $420K cash in, $210K (50% gross margin) to $164K (61% margin) cash out, so $210K to $256K cash in in Y3-Y5.

Canowhoopass

Why you should try to help me understand the company?

Isn't the point of forums to exchange with others? Help eachother understand our investments, to avoid making mistakes of various kinds?

Why are you here? You don't have enough social life so you hang out on forums to say "yeah, yeah, if you have questions you're an idiot".

It's ok, you don't get it, I don't get you, you don't need to comment my every post.

Canowhoopass

It's ok, I don't understand why you spend your time cheering a company at which your threw money while showing absolutely zero interest into how this company works or how much it works

you don't understand why I'm trying to undertand and value a company.

We don't understand each other, that's fine.

This is the contracted ARR, not ARR (which is for registered customers).

Basically they signed contracts for a bit more than 20K clients.

Canowhoopass, I bought indeed around those prices, based on what the management had said. I gave them a pass on the £7.5m mistake, manily because Ondo comes from HomeServe, which is a big, serious company. An obvious mistake, but I don't blame myself for it.

I liked the value proposition, the business model, the fact that it looked like a win-win-win scenario for ondo, the insurer, the clients.

I crushed the numbers based on what management said. I estimated the company.

Now I am not sure what the real numbers are, and the company communicates very very poorly. They don't answer to messages left in the investor section either. Margins are down, numbers unclear; how can I trust management's guidance if the previous one was so wrong and if I can't even make sense of the numbers published today? So I sold. Lost money.

Again, I'd very happily change my mind if you can help me make sense of the questions that trouble me. Please, for the love of god, help me udnerstant what I do not understand. Surely someone here understands what they are invested in?!

I was told that I was only here to spread "fud" because I could not see how positive ebitda could be achieved before March. Not even sure of which ebitda we are talking about, and nobody is able to provide an answer. Now did they mention whether this guidance was maintained during the call?

You know what's not a great strategy? Investing on wishful thinking and having no idea what you invest in.

Stop whining, be productive, and help me understand this company.

Correction:

the report says there are 48K US customers, the presentation says there are 48K US customers *on new contracts*

Canowhoopass: Short-term?

No, I'm simply investing based on fundamentals.

Maybe you can help me with that:

(1) the report says there are 48K US customers, the presentation says there are 48K US customers. It seems that the US customers on old contracts are all gone. Your are an owner of this company, you should be able to tell me this.

(2) Similarly, on p4 of the last report, it says that US ARR was $2.3m "HY to Mar 25". How do you reconcile this with the ~£1.5m in p12 on the presentation of the FY results? Was the GBP:USD exchange rate 1.5 at the time ?

(3) How do you explain that contracted ARR went from £5.9m to only £6.0m even though some contracts were won? Change of method of calculation? Some contracts did not materialize? You are an owner of this company, you should know that information.

If you can't answer these questions, how can you pretend to be a long-term investor if you have no idea what you are invested in?

At the moment, I have no idea what I was invested in. Precisely: I'm an investor, not a speculator or a trader. So I study the fundamentals, and I adapt when they change.

I can change my mind if this is clarified. I'll study the last report more.

Please be constructive and help me and others understand this company so we can be happy owners.

What was a shock was the awful, awful communication, and the short amount of time between assertively making some promises and breaking them.

Clearly, management doesn't see other shareholders as owners of the company: communication is poor, key details are hidden or not discussed.

I sold all my shares. I haven't fully analysed the report, but I hate sloppy work, I hate being treated like a stupid wallet. Shareholders are owners of the company, the management has a duty to treat them as such and inform them properly.

Put this CEO in a sales position and bring in a proper, honest CEO.