Checkit Share Discussion Threads

[porous lover] 25/4/2024 07:41

xxx

The words paint a picture that the cash flow doesn’t support. To pick up on your point: inflation peaked at >10% growth, so net rev 6% growth on the assumption pricing was increased to compensate. No mention of new customer contribution but Kyte referenced 300k on previous investor call.

Now the cash flow… the burn was £6.6m vs £8.6m last year BUT benefited from additional £0.4m interest with increased £0.2m of capitalised R&D. The interest will significantly reduce this year as cash burns down so growth would have to ramp up significantly this year (30%+?) to have a hope of not requiring further funding next year or year after.

More alarming for shareholders is the cash burn is INCREASING. Cash burn in H1 £2.8m (£15.6m to £12.8m); cash burn H2 £3.8m (£12.8m to £9m). An extra £1m. Presumably a large chunk of that £1m relates to bonus payments for the stellar performance. Quack quack.

[xxx] 25/4/2024 06:57

To my mind the results are disappointing. They have pushed breakeven out a year and ARR growth of 16% is disappointing bearing in mind the rate of inflation.
This change in the forecast has come in the last 6 months , so implies decelerating growth.
The market values the company lowly relative to the sector and perhaps they sniffed this out.

KK's repriced options in the last 2 months point to greed over competence.

I will vote against all motions at the AGM.

[porous lover] 24/4/2024 07:03

Trev

You seem to completely have overlooked that the continual investment in new product development has, and continues to, deliver nothing. A pivot towards cash generation is welcome but this needs to come through the conversion of new customers. In an era of low productivity, rampant wage inflation, significant workforce shortages etc, this business has failed on every metric. This should not be a difficult business environment for competent management with the technology they've inherited. As a longer term holder, having canvassed the views of larger shareholders, i have a contrary perspective. The vultures are circling and the Kyte, rather than blowing high in the sky, is a lame duck. Quack quack.

[tradertrev] 22/4/2024 11:55

KK has been with CKT barely 3 years, 3 months less than that as CEO. The business model had to change from the previous no-holds-barred expenditure on everything in the free money era (largely before his time) to something that assumed no support from the capital markets. This has reduced the new product development activity temporarily (no bad thing really) and focussed sales activity on existing customers (the expand bit of "Land and expand") where sales cycles are probably shorter and business development costs lower, again no bad thing really.
I am a small shareholder sitting on a paper loss (bought at average 40p) and hoping to buy some more a little lower down. I am relatively happy with progress in the past 3 years during a particularly difficult business environment.
However, I am neutral on KK, whereas Porous Lover appears to have an axe to grind in that direction. Are you a casualty of the company's need to move towards a more sustainable model?

[wad collector] 15/4/2024 21:46

Yes it does rather smack of desperation. Bit like saying a customer has renewed his library books.

[porous lover] 15/4/2024 11:12

It is a sad state of affairs when additional aggregated contracts with existing customers (presumably BP and Compass) worth £139k per year are deemed RNS worthy.

Results due soon. No doubt full of shyte Kyte will have been richly rewarded for his continuing failure. Interesting that he is yet to put shareholders money where his mouth is and buy a material amount of stock.

[porous lover] 15/3/2024 07:27

I think one needs to reflect on the context here. In an era of low productivity, high attrition of low paid workers and high wage inflation, a business that presents itself as solving these crises should be flourishing. Instead we have had forecast slashed, management waxing lyrical for achieving these slashed forecasts, very limited new customer growth (c£300k last year for a £4-5m+ sales/marketing and product spend), a 2/3rds reduction in share price and massively repriced options to reward this failure. If it isn’t the CEO’s fault, then to whom should the finger of blame be pointed? This was a business with potential before Kyte began to spout his rhetorical shyte.

[tradertrev] 14/3/2024 16:41

I don't think the CEO can be blamed for the end of the "free money" era, which had allowed the valuation to rise to unsustainable levels and had to return to something more realistic. In fact, it's hard to criticise the execution of the business plan IMO.

[tradertrev] 14/3/2024 16:38

Not too concerned about the new grant of options, but am surprised that he surrendered the previous ones with an exercise price of 55.5p, when he had until Feb 2031 for the shares to get above that price. Maybe there was some tax benefit?

[porous lover] 14/3/2024 16:24

A rather interesting irony. Kyte chips in his options priced at 40ish pence, a strike price 10-15% lower than the 46p for the £20+m he hoodwinked shareholders into digging in their pockets for; only to have his options repriced at 20p. You can’t make this up - reward for failure. Utter failure.

[wad collector] 20/2/2024 21:57

Didn't realise that you were related.

[porous lover] 20/2/2024 21:01

Sorry Trev, you’ll have to enlighten us as to who the myriad of new customer are. Only a 60% destruction of shareholder value over the last couple of years, but you fill your boots son.

[tradertrev] 20/2/2024 20:56

I just watched the recording of the IMC presentation. Rather better than I was expecting, to be honest. I may not have enough of these.
Not sure what porous is on about. They have a clearly stated land and expand strategy and it's much more than just Sodexo and Compass. One wonders why someone would be so negative on a £26m company close to its lows since the company was listed in its current separate form.

[porous lover] 20/2/2024 20:44

The issue is that when one dives a little deeper the wheels come off. Sodexo and Compass have been talked about for a decade, existing customers are being “convertedR21; from annual contracts to SaaS. All smoke and mirrors. Winning new customers is the only leading indicator here and it amounts to a handful of magic beans relative to the S&M spend and the development spend. The words, as ever, are great; the delivery is non-existent relative to the investment. If one assumes 30 new customers this year then it translate to an acquisition cost of £10k per customer.

[tradertrev] 20/2/2024 09:27

Co not yet in control of its destiny (i.e. still cashflow negative). If or when it gets to that point the shares will lift-off.
The relative lack of new customers of late is of relatively minor concern to me, as it is only to be expected that sales timelines get extended when the economy is sluggish.
The fact that they are still growing revenues at attractive rates with existing customers (where there is still substantial untapped potential) speaks to the quality of the product, the inherent attractions of the business model and the "land and expand" sales strategy.
I am happy to hold and wait at the current valuation.

[tightfist] 19/2/2024 12:07

Yes, now a completely different business. Interesting write-up by ST on p30 of the latest IC. EV trading at only 1x ARR made me blink!!

[wilske] 19/2/2024 12:00

I believe its only reasonable to look at this situation since the new CEO and Management team came in during 2021. Before that Checkit and Elektron Technology (as it was) was a completely different business. Due to the history, the market will take time to be convinced that the story is very different now so we should be patient. I will give them until end of 2025

[porous lover] 15/2/2024 19:08

It’s taken 10 years to acquire 500 customers. Only 30% of growth has come from new customer acquisitions; ie £300k. This was stated by the CEO on the call. The balance has come from inflationary price increases. So yes, the growth is very poor. £3m+ per year in S&M costs plus endless capitalised development to acquire £300k of new business…

[gerihatrick] 15/2/2024 16:30

I thought the presentation on IMC was fine. They have 500 clients and the land and expand approach seems to be working. Compass is a good example where they started with one contract and already have 5 as confidence in the product grows.They clearly see the US being a major opportunity.

[wilske] 15/2/2024 16:14

Dear All

I dont see how these results can be described as poor. ARR growing at 17% and US ARR now at 26% and growing at almost 30%). The ARR growth rate is similar to last year which was only the second year of moving to a SaSS model so its reasonable to expect a small decline in growth but its still solid numbers. Most importatatny, they are delivering what they said they would do and are on track for profitability sometime in year 2026. I dont see how they will run out of cash as there is 9.0m in the bank and LEBITA will probably be 2m in 2025 and maybe 1m in 2026 so there should be sufficient cash left for investing in the business or a bolt on smaller M&A to help to accelerate to profitability. We will hear about this more in April.

[smithie6] 15/2/2024 11:08

Agreed...poor results imo...

...to hold up the share price, with it's loss making, a much higher growth % was needed imo

[wad collector] 15/2/2024 08:25

Hmm, it is losing less money. The free cash is falling but it is going to run out in 18 months if it continued at this rate.
But the rise in sales may save this slow motion crash.
Maybe this is pessimistic , but I do remember when this company used to make money.

[wad collector] 14/2/2024 21:43

I like to see a share price rise on the eve of TU.
Not holding my breath mind...

[luzley] 12/2/2024 09:50

Trading update on Thursday at 2pmShould give details of advance on strong H1 sales and upbeat expectations.