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Gapeseed

6,616 Posts.

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16/11/15

13:56

Post #: 16405320
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Originally posted by SeanFromSydney ↑

The other upside to consider is that any further growth actually lowers their ongoing R&D costs significantly over time.

Consider that they win their first new client, and that hospital has software A in Emergency Room, Software X in Oncology and Software Y in Paedeatrics. This is not an uncommon situation in Healtcare IT as these software are specialised for those departments. Alcidion has to do an "AXY" integration into that hospital to give real time decision support for patients who go from one department to the next.

They win another new client and have to do a "AXZ" integration. They now spend a third less money developing the code for their software to 'talk' to that hospitals systems.

And so on and so on until in a couple of years time every new client has a combination of systems they've already seen before and is a much more 'plug and play' integration.

Annual software license revenues go up and R&D goes down.

We are currently seeing this 'pretty much break even' with very low revenue and very high R&D in the grand scheme...

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Ripping post!

Also important not to forget the recurring revenue model.

NRR Price at posting: 7.4¢ Sentiment: Buy Disclosure: Held
4 Upvote

0 Great analysis

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