Member Info for Theai

I think the meeting with Gresham will be without coffee. The market is strong at the moment. Shandypants2 is right - if the trading period they are in now was good then this was a super op / platform to bang the drum. No management team would not grasp this chance.

I know I have been cautious in my thoughts but I didn't expect this. The rest of the sector is growing far faster and have not seen a material covid slowdown - if anything there has been an acceleration in demand for digitalization of procurement and supply chains. Reading this I come to two conclusions - the management/leadership is either incompetent (loss of clients, high employee churn and large restructuring cost - which sounds more like a ****-up for a company this size) or they are manufacturing a situation they can take the company private.

Super point of view.

I think the business is probably ok as they have said - dull but moving slowly along. My concern is the board room - CEO, CFO, COO and Hugh Cox the founder have all left/fired/whatever in the last few months. Leaving just the new CEO who was promoted from head of sales and hasnt been in the company long at all. So I recon the Chairman + Non Execs have lost control, they have no executive team to speak of with any track record and time in the company left. And if the departing executives have stock and are upset - they may be sellers. Not to mention the institutions who invested on the last round to support the team that has just left. There may be a large overhang of stock. IMHO.

Agree - if there was some new logo win news - momentum RNS - that would support the next move to 10p

Agree - Covid and Brexit were catalysts for their two lines of business.

As I mentioned earlier about my one or two concerns I think this trading statement may confirm them. The world's supply chains are digitalizing at a rate never seen before which is producing increasing amounts of data that needs to be processed coupled with the increased need for risk and compliance reporting. Why do they only advance by 4% which we all know will have required every last cent and penny to have been stretched. This is after two acqusitions, on their 3rd CEO and now the CFO resigns immediately after the last CEO is sacked. Sounds like the Non Execs should be put under the spotlight - executive management looks questionable. Yet the Founder Hugh Cox remains - what does is he doing? Back of the envelop assumptions - I recon no new core business is coming in. I cannot believe the Customs Software is doing badly so growing. So as one rises the other falls - which means there is churn in their core business which is also in a growth market. As I said when they stated they are investing in sales and marketing it will take a year to materialise we have a wait and the stock remains dull. BUT the board looks disfunctional. This was a growing business with a good reputation.

I was expecting news of contract wins as mentioned in the last update. Given this sudden news makes me even more cautious about them closing their sales pipeline, particularly as this has happened in the last month of their financial year.

Agree re news and SP. I get cynical about directors talking about good pipelines. It is usually a deflection. We need to hear that they have converted these opportunities.

When I was reading it I was positive and saw encouraging progress - BUT when I got to the CFO's report I was concerned when he wrote....

"Due to the slowdown in closing of sales opportunities as described in the CEO Report, and a small degree of churn (4.5%) the annual recurring revenue at the period end was down slightly to £6.2 million since the year end (30 April 2020: £6.3 million), but nevertheless up from this time last year (H1 FY2020: £6.0 million). The contract revenue backlog reduced from £6.3 million at the start of the period to £5.9m at 31 October 2020 but remains well above the level this time last year (30 October 2019: £5.1 million)."

Things are slowing..... I expected the investment in sales and marketing will take some time to materialise - 12 months? If you overlay a 5% churn on the CFO's numbers the second half is going to be tough, and it may not be until next year we see the returns from the investment in sales and marketing.

But you are right - it is a good sound underlying business - it is just not YET exciting. Fingers crossed.

- Material Overhang of stock held by institutions that are causing downward technical pressure on the price as they manage their exposure. This far outweighs retail interest.
- Stale Bulls - there are a large number of investors who have bought over many years who again will limit the short term upside.
- Management. Easy to criticise but how they have sequenced certain recent events, positioned the company from a financing perspective and lastly structured their raises may keep institutional investors on the sidelines for now. None will find funding the returns of the most recent institutional investor a particularly attractive use of their funds.

In situations like this patience is key. Once the first two points have been cleared up and there is a reasonably successful outcome to this phase - the stock will make a constructive move up.

That makes complete sense.

I agree - it is a good company with super clients. BUT I have a concern in that the last proper contract win announced was in January. That is a long time for a tech company. I know there have been about 3 others since then but these announcements where confirmatory - what a tech company should be doing in the normal course of business - looking at them I cannot help feeling it may have been the broker telling them to announce something. Making an announcement about renewals is strange for a SaaS company who would normally have churn of only 5% to 10% - why state the obvious? There is something niggling me - BUT I absolutely agree it is undervalued!

You couldn’t write the book. Small company with super prospects has over the last year been thrown more challenges to overcome than anyone could ever imagine – and yet they keep the boat sailing. It is not easy doing what these guys are doing, they are brave and bold, and I wish them all godspeed. I sincerely hope they hit the jackpot because they deserve every bit of it.

Often the case traders - buy on the rumour and sell on the news.

Just a day of trading...... things will settle and the price will get back to work, reflecting fundamentals.

Listening to the AGM I thought it was reasonably positive.

Areas I thought looked less clear :
- The Brexit Customs business they bought sounds as if it was a good buy, but the uptick in business that you may have expected has not yet materialised.
- Interest levels seem high but the buying decisions are slow
- I couldnt help feeling that the CFO's presentation was less convincing. He didn't sound comfortable with his forecast - he seemed to be a little bit on a knife edge. Probably relying on something which could tip the balance in his favour if it comes in.

Summary - sounds like a good business but covid has impacted and numbers may be a soft.

You can listen to the AGM here https://www.rosslyndatatech.com/investors/2020agm