Hi tdubs et al., I have modelled the financials and business now...

Hi tdubs et al.,

I have modelled the financials and business now for some 8 years.

I too, like some here, was a little concerned about how deep they would go into the BS to fund their capital programs...namely 3D development and roll-out, US capture and sales growth strategy.

And yes, they spent a lot in 1H18 (nearly $3m more than my est). Yet it must be put in context. You correctly point out that it was clearly at a rate that was unsustainable without a CR. But what we didn't know was where they were in each program's investment schedule. Management have come back today and confirmed they are at or near the end of 2 of them...3D development and US sales growth strategy (for now).

The clear message it that NEA is now moving from an investment phase to a return phase; they will spend the next 12-24 months focused on growing returns and the balance sheet.

A lot of investors don't fully appreciate how distracting the execution of 2 major growth investments can be for management of a relatively small company. Of course, we now have to witness the real financial returns on such investments, but there is nothing within today's announcements or commentaries that suggests or hints at any unexpected issues with this.

In fact, the opposite is the case. They have revised up their ACV's and some other metrics (not by a lot but definitely in a positive direction) and most importantly....

"...our cash resources enable us to organically fund the next stage in our growth."

Now all this does not preclude NEA from undertaking a CR for purposes outside their current strategy (eg expansion to Europe/Asia/Canada) which would require some $15-30m to initialise. I would anticipate getting greater clarity on new regional aspirations later this calendar year; once management get greater visibility with the real returns from these latest investments.

I would also like to add that the degree of financial transparency is extraordinary for a highly competitive, relatively nascent business model. Well done management!

Maybe that's why an insto has decided to wade in this morning.

Cheers,