RE: Shakeout23 Mar 2022 15:39
What's the adjusted EBITDA loss got to do with ARR or Enterprise value? Nada.
The point being that if they stopped trying to grow (i.e. opening new operations in APAC) or were bought by a competitor as a bolt on, the EBITDA losses could be cut overnight. It's one of the key reasons that high % ARR SaaS companies command such heady valuations.
From the £30m placing RNS last summer;
"Use of proceeds
The net proceeds from the Fundraising, together with the Group's existing cash balances (which were £5.9 million as at 31 January 2021) will finance the strategic development plan over the next three years. This will primarily involve building on the progress made in and expanding the scale of the Group's existing operations in North America, the UK and mainland Europe and establishing operations within new territories, namely Asia Pacific and broader European expansion, as well as significantly expanding the Group's sales, marketing and product & development headcount. The Directors anticipate that the sales and marketing headcount will increase by 247 per cent. during 2022 and the product and development headcount will increase by 122 per cent. during 2022.
It is anticipated that, in the short-term, executing this accelerated growth strategy will result in significant cash outflows and the Group is likely to generate losses. The increase in scale of the Group's operations is expected, in the medium-term, to deliver operational efficiencies and strengthen the Group's competitive position, in turn helping to increase essensys' share of these growth markets."
So the market was fully aware of the increase in EBITDA losses & cash outflow...
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