ISD (ASX) Financials, what new management will bring?

Originally posted by 8horse: ↑

The earnings guidance was given in August 2018.
CEO, Ed joined ISD August 2018.

Additional expenses:
- $1.5m for Investment in critical new roles and
capabilities:
• Product development and project management expertise;
• Executive and sales leadership; and
• Infrastructure support
- $1.2m for Interim labour required to improve service quality, pending future automation.

I suspect these additional expenses would be offset by reduction in copyright cost. That’s probably why the earnings guidance is now including the copyright reduction.

These high profile management are not cheap but you need them to rebuild the company.

They signed 40 clients per month, but also lost some clients. ISD had no CEO for five months, no CTO for six months. Now all new management team are on board. The team is working towards product innovation which is paramount for the company.

Modest reduction in copyright cost, would and should win more clients.

Asia CEO, Mr D Liu is leaving. Asia revenue hasn’t grown much over last two years. According to last Annual Report, about 1/3 of his remuneration is based on revenue and EBITDA performance (he achieved 55% last year). As Asia revenue is flat and EBITDA dropped by $0.4m, he would result in less pay. Maybe it’s time to change Asia CEO as well.

They just released a three year growth plan, first time we have seen revenue and EBITDA are expected to grow, 10-20% compounding annual growth for EBITDA from the base low to mid $20m, is a great plan.

All imo & DYOR.

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Another poor set of results for mine. Still bleeding revenue and margin through a legacy product set run-off. Costs not being reset quicker enough.

Copywrite win will clearly help to better align with variable cost base.

Value trap?

However, the focus should be on the future.

Can the new Mgt Team pull off 10-20% 3-year EBITDA CAGR?

They need to invest $8-$9.5m this year to get ready. ~$5m in 2H19

The business has limited FCF, but ~$9m in available undrawn debt. However, ISD seems to fixated on debt reduction as EBITDA has been stinking rapidly. Thought covenant headroom seems okay if EBITDA stablises

Another poor set of results for mine. Still bleeding revenue and...