Accesso Technology Share Discussion Threads

[rivaldo] 24/4/2023 06:40

Good to see an earnings-enhancing $10m acquisition today in the ski sector which ACSO already knows so well - should enable a load of cross-selling and synergies:



OT : cheers cestnous.

[cestnous] 24/4/2023 06:36

Thanks rare contributor and rivaldo for your illuminating insights, much appreciated. Nice acquisition announcement today.

[rivaldo] 18/4/2023 13:42

Excellent new presentation by ACSO here - good to see the ambitious target of $200m revenues with margins of a minimum 27% by 2025.

That would entail pretty impressive 43% revenue growth by the end of next year and substantial growth in EBITDA margins (assuming that's what he means):

[rarecontributor] 06/4/2023 14:25

They could certainly capitalise a lot more if they wanted to. A good chunk of the work they do is general maintenance of existing software but they’re developing new general features and customer specific features constantly and could capitalise all of that. They choose not to and they’re absolutely right to do so. Anything they capitalise must be amortised eventually (and they work on 3-5 years I think). They chose to capitalise $21.1m out of a total of $29.4m in development costs in 2018 and only amortised $8.1m which added £13m to their profits for that year! The links below are to articles from 2019 which talk about the consequences of this accounting practice for Accesso. They effectively mortgaged their future back in 2015-2019. Since Steve Brown returned as CEO and Covid struck they’ve been handed a major lifeline though as it’s dramatically speeded up the shift to mobile transactions. The days of queueing up at ticket booths are gone. Steve Brown did such a good job of reducing costs during Covid, combined with a rapidly growing business, that they ended up being able to reverse their accounting practice. They capitalised $0.72m in 2021 and amortised $9.32m which actually reduced their profit by $8.6m. By the end of 2019 they’d capitalised $46.72m more than they’d amortised. This difference has now reduced to $23m. If they continue with the current accounting practice then in 3 years time the capitalisation and amortisation figures will be roughly equal – and profit figures will be greatly increased as a result! The first of the links below gives a good explanation of capitalisation v amortisation. It’s about two thirds of the way down the article. I do hope they’re right about $136.3m being a severe but plausible downside revenue scenario for 2023. If they can hit $150m+ this year without taking on more people then the future is bright.
hxxps://knowledge.sharescope.co.uk/2019/03/12/screening-for-my-next-long-term-winner-accesso-technology/
hxxps://www.theticketingbusiness.com/2019/06/07/insights-riding-rollercoaster-accesso/

[deanowls] 05/4/2023 13:04

What are the criteria they use though if it needs that level of service each year is it actually a running cost which is probably why they capitalize so little.

[rivaldo] 05/4/2023 11:02

Peel Hunt say Buy, with a 1,035p target - quite some upside:



Good posts rarecontributor. Perhaps you should try to be moreprolificcontributor :o))

I too had noticed the remarkably conservative write-off of development expenditure. The total development expenditure for 2022 increased to $43.2m, 24.5% higher than 2022 - yet of this, only $2.2m (around 5%) was capitalised. Without this net profitability would be considerably higher than it already is, and future profitability will undoubtedly benefit hugely.

[rarecontributor] 05/4/2023 10:39

Part1………….
A disappointing set of results given the increase in revenue of $14.0m compared to 2021 really. Costs have clearly increased significantly, in part due to wage increases, but mainly due to an increase in headcount from 513 to 568. Steve Brown did say that he’d ‘right sized’ the company last year so hopefully he knows of additional demand worth recruiting the extra people for.
Digging into the detail reveals a few important things however. Accesso’s largest customer (Six Flags) really did have a howler of a year last year! Revenue with Six Flags reduced from $35.3m in 2021 to $24.1m in 2022. Six Flags changed strategy early last year after a change of CEO at the end of 2021. His new strategy is to position the company as a Premium Offering. Unfortunately they seem to have decided to start charging premium prices without firstly investing to transform themselves into a premium product. As a result attendance was 26.3% down on 2021, which itself was affected by Covid. Attendance was down 37.8% compared with a pre Covid 2019! With empty parks it’s no wonder that guest experience revenue with Six Flags (Flash Pass virtual queueing) was down from £25.2m to $17.1m. This is obviously a customer specific, rather than market wide, disturbing trend as revenue with Accesso’s second biggest customer (Cedar Fair or Merlin) increased from $14.8m in 2021 to $19.4m in 2022. Six Flags have admitted that they pushed prices too much and have reduced them significantly for 2023. They’ll report Q1 earnings in May and it will be interesting to see if they’ve turned things around. At least Accesso don’t seem to be recruiting seasonal staff for Six Flags parks this year (according to their ‘open jobs’ which I’ve been following). This is no doubt due to a move away from wearables to use of Qsmart mobile virtual queueing at six flags parks. Margin on this business will therefore be higher this year. There also seems to be an opportunity (which Steve Brown did mention last year) of selling other products to Six Flags (TE2 in particular). The CEO at Six Flags had talked about a more data focused approach and they are launching a completely new mobile App this summer so I’ll watch with interest to see if it is TE2. That would certainly help to reverse the $11.2m revenue loss with Six Flags that we saw in 2022.

[rarecontributor] 05/4/2023 10:39

Part2………….
Regardless of the position with Six Flags, Accesso do seem confident of another year of growth this year which is very much inferred from their ‘Going Concern’ section. Their severe but plausible downside model predicts revenue dropping to $136.3m for 2023 from $139.7m this year (a drop of 2.4%). If that’s severe then I’d be surprised if revenue didn’t hit $150m+ this year if things do go to plan. Last year their severe but plausible downside model predicted a yearly revenue of $97.7m for 2022 (such a large drop due to the ongoing threat of Covid I’ve no doubt).

[rarecontributor] 05/4/2023 10:37

Part3………….
A very significant driver for profitability growth for the next few years for Accesso is actually just an accounting practice. I’ve gone over this in detail in past posts. Historically they had a policy of capitalising big chunks of development expenditure up to 2019 but only amortising smaller amounts. This had the effect of flattering the profit figures by moving development expenditure from the P&L to the balance sheet. These are the capitalised figures for years 2013 to 2019 ($1.7m, $2.6m, $6.2m, $11.6m, $12.4m, $21.1m, $21.06m). This compares to the amount that they were amortising for the years 2013 to 2019 ($0.86m, $0.69m, $1.19m, $1.93m, $4.17m, $8.1m, $13.0m). Despite the much larger amortisation figure of $13m in 2019 there was still a positive affect on the P&L of $8m that year. Now compare that with what has happened since then. These are the capitalised development expenditure figures for years 2020 to 2022 ($2.97m, $0.72, $2.16m). And these are the amortisation figures for the same period ($11.44m, $9.32m, $8.74m). If they hadn’t capitalised so much early on then there would have been an additional $6.5m of Profit for 2022. Profit will obviously increase year on year as more and more is amortised as there will be nothing left to amortise eventually.

[wad collector] 04/4/2023 07:37

Market seems to like the numbers. That elusive tenner looks a while away though...

[saucepan] 04/4/2023 07:09

Thanks, rivaldo. That is very helpful. As you will gather, I don't follow ACSO too closely but was sufficiently interested to take a quick look at today's results.


aimingupward2 makes a good point. The Company would have helped itself more by making that fact clearer. Eps is an important figure.

[aimingupward2] 04/4/2023 07:02

Thanks for clarifying that so well, rivaldo. You would have thought that the company would have made more of an effort to make that clear, instead of letting it seem that trading eps has halved.

[rivaldo] 04/4/2023 06:54

Saucepan, it's all to do with tax - you need to read the Notes!

Headline PBT was up, but last year there was a huge £12.6m credit re deferred tax on US losses which this year was zero, so the drop in basic EPS is entirely artificial.

Better to concentrate on the true core EPS for the year in itself sinec the comparative is meaningless as a headline number.

If you strip out the $65m cash from the £277m m/cap, I calculate the historic P/E is only around 18.8 now, which seems very good value considering the potential and repeating and long-term secured revenues.

[saucepan] 04/4/2023 06:38

What is the main reason for basic eps DROPPING 54.3%? I cannot find any explanation in the results. Reported margin has not changed much.

[cestnous] 04/4/2023 06:22

Don’t think that the market will like those eps figures though.any excuse atm. Let’s see.

[ayl30] 04/4/2023 06:13

Ahead, no debt. Current year , two months, in line with expectations

[aimingupward2] 03/4/2023 09:35

Understandable nervousness, cestnous, but whatever the short term response to tomorrow’s results turns out to be, (and there may, of course, be some short term profit-taking), the company is progressing well and the share price will go on to reflect that.

[cestnous] 03/4/2023 08:19

Yes and I hope they are as good as expected as I have been buying a lot more recently. Now by far my largest holding, but a little nervous nonetheless.few pints tonight I think.

[wad collector] 02/4/2023 14:03

Finals Tuesday.

[saucepan] 12/3/2023 22:31

Thanks for that confirmation, davidosh.

[spud] 12/3/2023 19:23

That's good. Not currently invested but could have been a concern for holders. spud

[davidosh] 12/3/2023 12:17

From the last AR

Registered office: Unit 5, The Pavilions
Ruscombe Park
Twyford
Berkshire
RG10 9NN
Registered number: 03959429 (England and Wales)

Auditor: KPMG LLP
Two Forbury Place
33 Forbury Road
Reading
RG1 3AD

Bankers: Lloyds Bank PLC
The Atrium
Davidson House
Forbury Square
Reading
Berkshire
RG1 3EU
Investec Bank PLC
30 Gresham Street
London
EC2V 7QP

[davidosh] 12/3/2023 12:10

They were with Lloyds...

accesso Technology Group PLC, a ticketing and service provider for leisure attractions, has increased its banking facility with Lloyds to US$25mln and has a further US$10mln for potential M&A investments.

[spud] 12/3/2023 10:25

Any exposure to SVB?spud