Financial Trends

I would like to share my latest analysis of NEA's financial trends (refer to recent NEA presentations):

1. Customer receipts at Dec 17 were running at an annualised rate of around A$56M;

2. Cash costs at Dec 17 were running at an annualised rate of around A$67.2M;

3. Capture costs are now stable and are running at an annualised rate of A$15M for US and AU combined;

4. Direct sales and marketing are running at an annualised rate of A$15.4M for US and AU combined;

5. Product and technology spend are running at an annualised rate of A$8.4M (including development & maintenance);

6. Based on the incremental ACV growth rate in H1 FY18, customer receipts should now be growing at around A$15M annualised.

7. Based on recent trends in ACV growth rates and recent updates on the US ACV, I expect the end of FY US ACV to be around US$12.5M. If achieved, this compares with US$5.3M one year earlier and only US$1.5M two years earlier. NEA's sales and marketing strategy in the US is obviously working very well, and should continue to gain momentum.

CONCLUSION:

My conclusion is that, provided cash costs are essentially stabilised, customer receipts of around A$71M in FY19 should exceed current cash costs of around A$67M. If correct, then NEA has the cash in the bank to start investing in other areas, e.g. Canada.