Cambridge Cognition Share Discussion Threads

[40 fathoms] 11/12/2024 03:24

Having read the updates from Dowgate and PL. One key point I noted is that both have forecasted a lower revenue number at £12.5 million than management's forecast. PL's note states that management is targeting a 30% to 40% increase in revenue for FY25 over FY24, but PL has chosen to take a more conservative approach.

If COG achieves the top end of management's target, it would align closely with the previous FY25 revenue guidance given at the interims. To me this suggests a general shift in revenue expectations to the right, rather than a change in the shape of the overall revenue outlook.

The cash draw in the second half versus a breakeven adjusted EBITDA is a bit harder to figure out. £600k will go towards the monthly repayments of the Claret Loan, and £137.5k will cover interest on that loan. This leaves approximately £1.6 million. There might be some restructuring costs related to the CEO and CFO departures, but the significant balance is likely working capital. This is probably accounted for by the difference between invoicing (and thus revenue recognition on new contracts won late in the year) and cash collection. If correct, this will convert back to cash early in FY25 and may explain the confident tone in the RNS and this situation will further improve with additional contract wins.

[bedford1976] 10/12/2024 15:10

The gross margin here is in the region of 80%. The operational leverage once orders start ramping up could make a £10m market cap 50-100m quite easily in a medium tern tine frame.

[yump] 10/12/2024 15:05

Scale up?

Not a reccommendation for the commentator really is it? I wasn’t aware there was a production line bottleneck!

[earwacks] 10/12/2024 14:17

COG gets a mention by a certain commentator as a company worth looking at.’worried about its ability to scale up.’ I would not have thought that as an issue, more about its ability to confirm orders. Anyone know what the margins are for Cog ? Usually pretty good for unique specialist software

[bedford1976] 10/12/2024 12:33

The fact the Directors state they expect cash to increase throughout 2025 is good enough for me. I really can't see why you would be worrying. Tge funds raised this year we're allocated for growth funding, and with the strong sales forecasts for 25. Well we are definitely likely to grow unless we are struck down by a new pandemic or unknown global disaster. Looks all fine to me and I'll be sleeping quite nicely after today's update :-)

[nchanning] 10/12/2024 10:37

Don't be too naive - they've burnt 2.4m in cash in the last six months and have roughly 1m at year end . It's squeaky bum time to avoid another placing , they might just do it but things are tight

[bedford1976] 10/12/2024 10:25

Oh come on now... The orders are piling in there is certainly no fundraise. We have £1 million cash in the bank with cash being collected on a larger order book from now onwards.

[nchanning] 10/12/2024 10:16

Still a massive range of potential outcomes here . Slip up again with another profit warning there will be more dilution at a big discount to the current share price . On the other hand if revenue in the next three years goes 13 , 16 , 20 with 3m of PATThen a 100m market cap is not outrageous

[bedford1976] 10/12/2024 09:59

Yes we are winning we have very strong revenue in 25 with contacts signed in Oct 24. Cash will grow strongly from Jan next year much like after the pandemic years when contracts get lumpy. I will continue to add here CamCog is performing strongly for a bumper 2025. Well done guys.

[40 fathoms] 10/12/2024 09:48

Historic conversion of sales pipeline has been between 30% and 40%. I think it is reasonable to assume that with the new product offerings which have less or no market alternatives it may be towards the higher end of that range.

[yump] 10/12/2024 09:35

Not sure institutions pile in on the morning of an update.

I see the usual random takeover talk appeared.

[yump] 10/12/2024 09:33

I think the words “sales pipeline” should be made illegal in RNS’s.

Or the pipeline should have some carefully specified levels of progress.

If anyone here has ever had a salesforce, you’ll know how “I’ve had over 10 meetings and they are all very positive”, can turn into zero sales.

[nchanning] 10/12/2024 09:20

To be clear you should entirely blame the company not the broker when they have a revenue forecast 30% too high that they don't bother updating till 20 days before year end . Cash/ dilution still a risk but had to buy a starter position as 1 x sales is too cheap for IP rich company like this . Strong share price reaction to bad update says there is some strong backing from Institutions and HNWs if placing needed

[earwacks] 10/12/2024 09:02

Morning all. Good of them to bring forward the trading update. Last time it was January 30th, actually this year. The cash balance was disappointing to say the least but not totally surprising given events or lack of them. 34 million pipeline is terrific if it translates to sales. It does sound as though they are expecting/hoping for the cash balance to recover fairly quickly if pipeline is converted. The market certainly doesn’t appear to be pricing in more dilution just yet. Good to see the company showing appreciation to the joint custodian CEO’s. So fingers crossed even tighter.

[bmcollins] 10/12/2024 08:30

Given the poor analysis done by brokers e.g. Panmure reducing TP from 150p to 56p & their 150p was with the stock in the mid 20p's I think it is safer to dyor than bother with them.
Hats off to 40fathoms whose posts before this announcement appear to be much more prescient (& certainly more insightful) than these brokers are.

[nchanning] 10/12/2024 08:15

I have to admit though the share price reaction to this bad update is very strong , shows there is some good backing for this company and they would be able to get another placing away without a huge discount

[nchanning] 10/12/2024 07:56

Dowgate forecast in November 2.9 m net cash at the end of FY24 . New forecast 1.5m net debt at the end of FY24 . If you want to believe they missed by 30% on revenue and there was basically no impact , and that adjusted EBITDA close to breakeven means they are not burning cash , then good luck to you

[mdchand] 10/12/2024 07:52

Panmure update as follows

A disappointing trading update for the YE December 2024 includes a stronger Q4 and better visibility into 2025. More encouragingly, close cost control means, despite the substantially lower than expected revenue, the company still expects an adj EBITDA of close to breakeven and management anticipate a return to sustainable profitability at the EBITDA level from 2025. We update our estimates accordingly, the signing of multiple contracts in Q4 is positive, and offers some comfort that the turning point has been reached. We retain our BUY but reduce our TP to 56p (previously 150p).

[jasperlachat] 10/12/2024 07:49

How can they need a further placing against better than breakeven since the last placing? Bizarre bleating. Visibility of sales is visibility of cash. All seems positive to me.

[nchanning] 10/12/2024 07:33

My advice to the company would be just to bite the bullet now and do the placing at a big discount . Do not wait until things are even tighter or the share price will collapse and the dilution will be enormous

[nchanning] 10/12/2024 07:28

Dowgate saying 1.5m net debt , a massive miss against their previous forecast . It doesn't really make sense that they have missed revenue by 30% at 90% gross margin and yet there is almost no impact on EBITDA . Well look at the difference in the new Dowgate cash forecast to see the reality

[40 fathoms] 10/12/2024 07:21

@NChanning, the point you make on cash is very much dependent on if the cash number quoted is gross or net . I am pretty it is certain it is net but broker forecast will confirm or otherwise. If it is gross it will get close but the 30% upfront on new contracts will be helpful.

[40 fathoms] 10/12/2024 07:14

So here is the market update we are waiting for and in the main it is pretty positive.

Revenue for 2024 will be light vs estimate
EBITDA Profit for 2024 will be in line or ahead of estimate at break even
Significant New Business being won starting this quarter
Significant Pipeline of Opportunities
The Company is expected to be profitable and cash flow positive in 2025

* expected to end year with cash of GBP 1million - It does not say if this is net or gross, I assume this is net but no doubt the broker forecasts when released will clear this us.

[nchanning] 10/12/2024 07:12

The only trouble with investing now after this profit warning is that cash is extremely tight again (as I said it would be ) , so you've always got to be concerned about the next discounted placing

[bedford1976] 09/12/2024 18:53

Over 568k shares traded today so it looks like somebody is stakebuilding.