Pci-pal Share Discussion Threads

[adamb1978] 06/10/2023 08:59

Agree about the short-termism in the UK market Simon. Its sad to see but very difficult to know how it reverses

[simon gordon] 06/10/2023 08:50

TRB today, SMV yesterday. Small cap tech stocks getting picked off. Just wouldn't surprise me if PCIP gets taken. UK market lives for the moment and is rapidly shrinking. TRB premium 69%. Sycurio was taken for £110m, tried to destroy PCIP to remain number two in the market, in 12 months time they will be number three with their core patent lost and a £5m+ legal bill.

[simon gordon] 05/10/2023 10:16

Nicolas de Kouchkovsky - September 2023:

Reflecting on my discussions at the KBCM Technology Leadership Forum early this month, I noticed CCaaS, once a favorite among investors, now appears to have lost its former shine.

Concerns arise about slower growth, profitability challenges, and the entry of major players like hyperscalers and CRM providers. Investors are also worried that AI and automation might replace a significant portion of the workforce and reduce tech investments for contact center agents.

I hold a contrary view.

Indeed, it's a crowded field, and some consolidation is inevitable. The journey to effective growth is arduous—some aging architectures demand urgent modernization, and go-to-market strategies need revisiting.

Yet, the industry is expanding, and its strategic importance for businesses of all sizes is increasing. It's all about effectively managing customer interactions in the digital world.

Two decades ago, I found that 10% of B2C staff occupied contact center and customer service roles. My recent analysis reveals roles blurring: an increasing number of employees in departments like sales or branches are virtually engaging with customers, sparking a demand for interaction technology. In the banking sector, customer-facing roles now surpass 20% of the workforce.

The volume of customer interactions continues to grow steadily. AI and automation help handle that growth more than cutting existing staff, with minimal reduction in the foreseeable future.

CCaaS is merely a piece of the broader puzzle. It is now part of a larger CX ecosystem. With AI, the focus shifts from queueing and routing interactions to data that fuels models. The future of customer interaction management will revolve around data platforms yet to be created. This is why I remain bullish about the space.

[sooty snipes] 04/10/2023 16:20

You mention Trump. Musk and Truss but fail to mention Biden. I take it you're okay with a man who can barely string a sentence together

[simon gordon] 04/10/2023 12:52

A £5m legal bill is huge for a company that turns over £19m per anum. A £10m+ bill would be nuts for such a tiddler.

Logically, they should fold. But if you look around there is a lot of madness: Trump, Musk, Truss and that's just in the political economy. Putin and Xi, geopolitically. SBF and crypto. Gaetz who's just felled the speaker in Congress and wants to shut down the American government.

Are Sycurio rational or bonkers. Should find out in next two weeks.

[simon gordon] 04/10/2023 12:25

Think they've got 21 days from the ruling to lodge an appeal. No doubt will be flagged by Caseboard if they do it by c.17/10.

Would imagine Sycurio will have a board meeting to discuss it, cost implications could be at the top of the list. Stick or twist, £5m or £10m+. Can they find a replacement for Connie Penn, who will represent them, do they need a new legal team. Lots of things for them to contemplate.

[adamb1978] 04/10/2023 12:02

Simon,

Do you know whether the deadline in 2 weeks time for them to appeal is the deadline for when they have to say they'll appeal, or the deadline by when they need to lodge all the paperwork behind any appeal?

Adam

[adamb1978] 04/10/2023 11:59

Thanks Simon. Item 2 obviously could apply here, and possibly item 1 too if the judge were to look at the UK ruling and invalidity cases

Rational. Sycurio should back off. If they dont it adds further weight to PCI Pal's view that Sycurio are just doign this to try to disrupt PCIP. Obviously hasnt worked so far so difficult to see why it now would!

[simon gordon] 04/10/2023 11:55

Morning Adam,

Claims construction starts in America at the end of the month. It is possible for the judge to throw the case out at this point.

ChatGPT

A Markman hearing, also known as a claim construction hearing, is a crucial phase in a patent litigation case in the United States. During this hearing, the judge interprets the claims in the patent(s) at issue to determine their meaning and scope. The outcome of the Markman hearing can significantly impact the rest of the case.

While it is uncommon for a judge to dismiss a patent case entirely at a Markman hearing, it is not impossible. The primary purpose of the Markman hearing is to provide clarity on the interpretation of patent claims, which can help both parties (the plaintiff and defendant) prepare their arguments for the subsequent stages of the case, such as summary judgment motions or trial.

However, there are some situations where a judge might decide to dismiss or partially dispose of a patent case during or after a Markman hearing:

1. Claim Construction Summary Judgment: If the judge's claim construction significantly favors one party and it becomes clear that there are no genuine disputes of material fact remaining, the judge may grant summary judgment in favor of that party on the issue of patent infringement or validity, effectively ending the case.

2.Invalidity Finding: If the judge determines that the asserted patent claims are invalid during the Markman hearing (e.g., due to prior art or indefiniteness), they may dismiss the infringement claims, as invalid patents cannot be enforced.

3.Lack of Standing: If it becomes evident during the Markman hearing that the plaintiff does not have the proper standing to assert the patent(s) in question, the judge may dismiss the case.

4.Dispositive Motion: After the Markman hearing, either party may file dispositive motions (such as motions for summary judgment or motions to dismiss) based on the claim construction outcome. If such a motion is successful, it can lead to the dismissal of some or all of the claims in the case.

It's important to note that the Markman hearing itself typically focuses on claim construction and interpretation, and its primary goal is to provide clarity to the parties and the court regarding the patent claims. While it can impact the overall trajectory of the case, it is not the stage where cases are usually dismissed in their entirety. Dismissals are more commonly associated with motions and arguments that follow the Markman hearing.

Ultimately, the outcome of a patent case can depend on various factors, including the judge's rulings at different stages, the strength of the parties' arguments, and the specific circumstances of the case.

[adamb1978] 03/10/2023 22:04

THink its a higher hurdle for Livingbridge to roll the dice again.

Back in 2021, their place was a mess and they needed some +ve news for their investors given the restructuring which they were going through after a bunch of duff investments. They were merging their fund teams to cut costs.

I think its harder for them to go again. Private equity isnt like venture capital where its double or quits. PE needs to get their money back. Losses arent accepted like they are in VC where its part of the business.

I'm not sure they'll appeal. Getting the patent back I doubt is worth the cost for them. It only becomes worth it to get the patent reinstated AND PCIP being shown to infringe. That's a much higher hurdle, but lets see - only two weeks to wait

[simon gordon] 03/10/2023 21:41

Fag packet calculation:

Court case costs:

-Costs to PCIP: £2m
-Sycurio’s costs: £2m
-Appeal PCIP: £0.5m (costs to PCIP)
-Appeal Sycurio: £1.5m
-American costs PCIP: £2m
-American costs Sycurio: £2m

Total cost = £10m

Sycurio could end spending £10m+ on this lawsuit. If they cut their losses now it would be around £5m.

[simon gordon] 03/10/2023 19:04

Sorry, I should have been more specific, it was the Finncap note that was issued with the trading update in January 2023. That was the first officially sanctioned forecast for 2024. Most companies don't issue forecasts directly to the market, they use brokers to do it.

There are companies with strong growth prospects being taken off the market because we have a lowly rated market. Premiums can be 50% and sometimes 100% if they are really beaten up. ARM went straight away after Brexit, our tech titan, UK fund managers are not super forward looking, they have a trading and dividend mentality, not a growth mindset like America.

[adamb1978] 03/10/2023 18:51

Hi Simon

"I think the first time the £20m figure was officially stated was January 2022 in a trading update."

I just had a look at that TU and there isn't a mention of £20m. When you say 'officially' stated, where do you see that? My understanding from the company was that the £20m figure was unguided.

re an approach: whether the board needs to announce it will depend on the deliverability of it. At 150p, so around 5x ARR, I could see it happening but not lower than that. I don't see it happening til all the patent stuff is done anyway, so something of a moot point.

We're also not far off when people will start valuing this off earnings, and at that level we're close to a hockey stick. I think we'll see something like 1p, 4p, 9p EPS in FY24-26 and based on that, a board would struggle to recommend anything under 200p given the company would expect to get there within a couple years organically.

Adam

[simon gordon] 03/10/2023 18:12

Hi Adam,

PCIP would have guided Finncap for the £20m. The '24 forecast from '21 was unguided.

I think the first time the £20m figure was officially stated was January 2022 in a trading update.

At least the patent issue is much clearer, if they had lost or it had been a squeaky bum ruling the share would be lower with fear of a cash call. Remember Silicon Valley bank earlier this year!

At 80p to 100p the board would have to inform the shareholders who have the final say. A PE house could buy them for £50m+ and then in two or three years time reap the reward with an upward valuation of say 100% to their buy price, one way to show LPs you are a winner. They are vulnerable, quite a few UK stocks have been getting picked off since Brexit and the de-rating of the UK market. There's some money in here at 95p, but the majority is from back in the day when it was sub 40p. Probably won't happen but they are more in play now the patent case is clearer.

The most important thing is what can they do in 2025, are they going to power forward. Are they going to be growing closer to 30% or 20%.

[adamb1978] 03/10/2023 17:32

Hi Simon

Regarding the Fincapp £20m forecast, I believe I'm right in saying that that was their figure, rather than one which management guided them to. And once an analyst has published that figure, its out there so would need to be amended at some point. Probably also better that the analyst adjust *his* figure now, rather than letting it hang out there til the end of the financial year.

If you class it as a miss then fair enough, but I'd be very happy if all companies in which I'm invested 'missed' by delivering 28%-30% growth!!! With the UK market as it is, really its bottom line and cash which matters (unfortunately) and in the current market nothing is taken on promise. Its very backward looking.

In terms of 80p-100p, it would have to be a hostile offer as there is no way that they would get board recommendation at those levels.

Adam

[simon gordon] 03/10/2023 17:19

Action over the next six months:

-Appeal 21 days to lodge: c.17/10
-Prelims: end oct, early nov
-AGM: nov or dec
-Form of Order hearing: dec
-Trading update: jan
-Interims: march

The cut in the forecast is disappointing. Going back to the Finncap note of September 2021 they had them doing £18.8m in '24.

Just shows, it's better to be conservative with forecasts because if you miss you lose momentum and some investors. Better to always under promise and over-deliver. PCIP have failed at this with this update and it's killed the buzz from the High Court ruling.

They will now need to build up credibility after this miss. Probably torpid times ahead until they either do an upgrade or are closer to the start of FY2025.

There's an outside chance someone comes in and takes them off the market for 80p to 100p, because it's as clear as the day as long that they've defeated Sycurio.

Other than that, it's nice to not have to think about the odds of winning in a patent case.

[simon gordon] 03/10/2023 08:55

Geri,

The chances of a plaintiff winning a patent dispute are very low in America, the odds are stacked heavily against Sycurio. The judge in America has been sent the British ruling. The UK ruling was so one sided that Sycurio would be nuts to continue in America and lose their patent in that territory. If they do continue, they'll lose it.

[adamb1978] 03/10/2023 08:48

Sycurio is a UK TopCo isnt it?

[gerihatrick] 03/10/2023 08:45

Simon, my only concern is that US courts are always biased in favour of US companies. The stats show that particularly when there are juries involved! I continue nue to hold and thought today's statement should be seen in a positive manner, I have 2 friends who had their technology stolen by the US and its legal system.

[adamb1978] 03/10/2023 08:45

I've added a few more. Its on a PE of perhaps 11x Jun-25 which is stupidly cheap.

Growth, profitable, cash generative...this valuation is nuts

[adamb1978] 03/10/2023 08:31

Thanks. Ok, they've cut back their FY24 forecasts slightly but really this wouldnt trade on FY24...and even if you do look at FY4, its on < 2x ARR!

[simon gordon] 03/10/2023 08:28

Cavendish - 3/10/23

Changes to forecasts – Following today’s outlook and FY23 revenue growth of +25%, we revise our FY24E revenue growth to +28% from +34%, or £19.1m vs £20.0m. Combined with c.90% gross margin and opex falling to £15.6m from £15.7m, FY24 adjusted EBITDA changes to £1.7m from £2.3m. Including further legal fees, and without including any benefit from costs recovered from the UK High Court case, FY24 net cash moves to £0.3m from £1.5m, with £3.0m of RCF available.

[simon gordon] 03/10/2023 08:26

Cavendish (house broker) you can log on their website at the Research section.