Diligent Boardbooks IPO

[SimonHouse]

"I worked at Diligent with hot Mexican and German chicks, and all I got was this lousy t-shirt"

[Carpenterjoe]

I love these fictional diaries, written by nerds pretending to be: (a) tormented geniuses who truly deserve more, or; (b) socially inept, unconfident no hopers who cannot seize the initiative in their own careers.

Interesting link CJoe, but I don't give much weight to garbage like this.

hahaha, I'm of the same view, if you don't like your job/career get a new one. Although a question about staff retention would be a good one at the AGM. Its an expensive process recruiting and replacing staff and you don't want to loose the good ones! I didn't even know these sites existed.

[winner69]

"I worked at Diligent with hot Mexican and German chicks, and all I got was this lousy t-shirt"

Good one

Like this one -

“Calling all Potted Plants....sit down, shut up, get paid go home and come back and do it all over again tomorrow.” Anonymous Employee (Current Employee)

Maybe a special weed potted plant

[youngatheart]

Less than 8 business days before the AGM. Anyone here going? Hoping very much for the last 2 year stuff up to be laid to rest and a new prosperous future ahead. What will they do with all that cash?!?

[Carpenterjoe]

Less than 8 business days before the AGM. Anyone here going? Hoping very much for the last 2 year stuff up to be laid to rest and a new prosperous future ahead. What will they do with all that cash?!?

Hopefully no dividend,

I'm happy for accumulation for while, because I can see an acquisition situation coming into to play. (Years away)

I'm quite comfortable for diligent to get stuck into selling the product they have and not get distracted with some shareholders cries of "other and new products".

Hopefully this year the shareholders will support the company and this will be reflected in a rising share price.

Should be a good year.

[Harvey Specter]

Hopefully no dividend,

I'm happy for accumulation for while, because I can see an acquisition situation coming into to play. (Years away)

I'm quite comfortable for diligent to get stuck into selling the product they have and not get distracted with some shareholders cries of "other and new products".

Hopefully this year the shareholders will support the company and this will be reflected in a rising share price.

Should be a good year.
Definitely no dividend. Maybe a small buyback at these low levels?

I think the new product is important as it diversifies their offering and also gives them an extra 'in' to a new company.

[Carpenterjoe]

Definitely no dividend. Maybe a small buyback at these low levels?

I think the new product is important as it diversifies their offering and also gives them an extra 'in' to a new company.

Agree, Good ideas take time tho, new products are not something you can force. I'm not stressing about it.

[Harvey Specter]

new products are not something you can force. I'm not stressing about it.In these quick moving tech times, the new philosophy is to get out a minimum viable product and rapidly improve based on user feedback. If you hold back launch till it is perfect, then you will be overtaken. Of course it depends on the product and in their case the security needs to be best in class but I would have thought that would be a copy of the existing product.

[iceman]

Definitely no dividend. Maybe a small buyback at these low levels?

I think the new product is important as it diversifies their offering and also gives them an extra 'in' to a new company.

Sodi is on recent record saying neither a dividend or share buyback are being considered !

[Baddarcy]

Sodi is on recent record saying neither a dividend or share buyback are being considered !

Yes he is, but was the share price $4 when he made that comment or was it $8 ?

[Harvey Specter]

Sodi is on recent record saying neither a dividend or share buyback are being considered !


Yes he is, but was the share price $4 when he made that comment or was it $8 ?I believe he has said it recently so more likely closer to $4 than $8.

If he rules it out again, I think he need to be more definitive with the plan for the cash. Even if it was only a small $5m or so, it would send a positive message to the market that it is undervalued, especially if they put out a comment saying they would only buy when they consider it severely undervalued.

[Harvey Specter]

It concerns me that these guys have no definitive plans to do anything with the cash.
Having said that, Apple has amassed over $100B and that hasn't hampered growth.

[Harvey Specter]

They're buying up shares and other companies/ideas though...
You missed my point and I realise that is because I forgot to type it ;)

There is no suggestion that DIL aren't the spending money they need to for the business to grow. You dont just go out and buy a company because you have cash.

It could just be that this is a wonderful business that throws of more cash than they could ever need and that they have been unable to find another wonderful business that is as great as they are. ;) Hence my buyback call.

[youngatheart]

Hence my recent DIL purchases :)

[youngatheart]

Would dearly love to see the final SEC released this Tuesday (usually Tuesdays for announcements) leaving a whole week till the AGM the following Tuesday. Already see the price shift upwards as we speak. I can't help but feel that DIL has managed to weather the NZ tech stocks share price rather well when compared with the volatility of XRO, PEB, WYN, SLI, SNK and GEO this past two weeks. DIL is a good company.

[youngatheart]

What's it when that red line crosses over the green line? :t_up:

5929

[Whipmoney]

What does it actually mean moose?

[couta1]

Time to make a mojito and club sandwich while chilling on the deck as DIL takes its sweet time getting the good news to ya ;)
Sounds about right Moosie when the MA60 moves below the MA30 it means Diligent are taking too long to get their s--t together causing more impatient people to sell up:cool:

[kizame]

And with the AGM soon i think the price will firm from here until we hear more.Aniticipation...

[kizame]

Jumped in this morning to cause a tiny ripple.

[JohnnyTheHorse]

I am moving to the mind that DIL is a buy with fully diluted PE @ 18, the filings are done and Europe may be coming online soon. I'd still like to know what they're doing with that cash and that may be the ace up their sleeve in the coming months...

She's quite a bit more than that.

[winner69]

She's quite a bit more than that.

What you reckon it is Johnny

Forecast profit $26m/$27m (normalised) on e cards

PE less than 20

I think Mr House is on the ball

[JohnnyTheHorse]

What you reckon it is Johnny

Forecast profit $26m/$27m (normalised) on e cards

PE less than 20

I think Mr House is on the ball

Key words there being forecast (so a forward looking PE) and normalised. Getting ahead of ourselves a wee bit eh?

[Whipmoney]

Key words there being forecast (so a forward looking PE) and normalised. Getting ahead of ourselves a wee bit eh?

Earnings from DIL are always understated given that a significant amount of cash is received up front and thus recorded as a deferred liability. Once you strip out gross margin and opex there is in essence a Net Unrecognised Revenue component which is received for the year.

[DarkHorse]

What you reckon it is Johnny

Forecast profit $26m/$27m (normalised) on e cards

PE less than 20

I think Mr House is on the ball

Could you enlighten me please, I must've missed something, what is that forecast profit based on?

[blobbles]

Could you enlighten me please, I must've missed something, what is that forecast profit based on?

Theoretically they spent about $10m on restatement costs over the last year or so. Take this off the Op Exp (or most of it), account for about 30% growth with a greater margin per customer and you will come up with quite a nice profit figure...



Year
EPS



2011
1c



2012
6c



2013
7c
with restatement costs of ~10m and ~65% growth


2014
20-25c
provided Op Exp kept under control and growth ~30-40%



Hopefully it will look like this, it could be even better if Europe growth takes off. End of the year they will hopefully be a $100m revenue company (what Xero just achieved), still growing and with ~$75m in the bank. With a capitalisation currently 1/10th of Xero's and a growing pile of cash instead of a diminishing pile of cash, they aren't looking too shabby. Their potential market size and disruption ability isn't as great as Xero's of course though...

[Baddarcy]

Ahhhhhhhh 20 June 2014....the day the pain ended.....?

[GizyGold]

Ahhhhhhhh 20 June 2014....the day the pain ended.....?
yeah be a good webcast to watch Friday morning, hopefully we can celebrate with some beers later that evening!!

[Baddarcy]

Do all the Diligent quarterly announcements get webcasts and conference calls? Or is this one special?

Yeah i was thinking that too, i don't recall any webcasts previously for a quarterly...especially one that is almost 3 months after the fact...

[iceman]

Yeah i was thinking that too, i don't recall any webcasts previously for a quarterly...especially one that is almost 3 months after the fact...

Yes I think this is highly unusual for a simple Quarterly. Here is the Q1 2013

DIL
16/04/2013 08:30
QUARTER

REL: 0830 HRS Diligent Board Member Services INC (NS)

QUARTER: DIL: Quarterly Update - First Quarter 2013

Diligent Board Member Services Inc. (DIL) have provided NZX with their
Quarterly results (see attached).

Excerpt from attached First Quarter Update:

We are pleased to announce Diligent's results for the First Quarter ended
March 31, 2013.

Revenue for the First Quarter of 2013 totaled $US 15.1 million ($NZ 17.5
million), an increase of 84% compared to the First Quarter of 2012.

The First Quarter for 2013 was a positive start to the year, with New Sales
reaching $US 6.6 million ($NZ 7.7 million), an increase of 2% from the First
Quarter 2012.

Cumulative Sales have increased significantly from $US 32.4 million at the
end of the First Quarter of 2012 to $US 58.4 million ($NZ 68.1 million) at
the end of the First Quarter of 2013, an increase of 80%.

Please refer to the "Related Attachments" section below to view the Quarterly
Update in its entirety - First Quarter 2013 Report
End CA:00235209 For:DIL Type:QUARTER Time:2013-04-16 08:30:03

[Bilbo]

.. Something's up.

Hopefully the share price :)

[Balance]

And even more odd given that the AGM is only 4 days later. Something's up.

Must have been plenty happening in the background while the accounts were being reinstated.

Here's hoping.

[Baddarcy]

Something's up.

I imagine no CEO + Chairman would want to front a AGM after the year DIL has had. Friday might be the buttering up we have all been waiting for..

[cyclist]

I imagine no CEO + Chairman would want to front a AGM after the year DIL has had. Friday might be the buttering up we have all been waiting for..

I hope so. Another one here who has bought in for the first time late last week.

[blobbles]

Remember that not so long ago a new (and very experienced by the looks of it) board member was added who made a half a million dollar bet buying into the company. When insiders buy, I am happy to be holding :-)

[zigzag]

Do all the Diligent quarterly announcements get webcasts and conference calls? Or is this one special?

As far as I can gather, this quarterly is only special in that it is the end of the long- running, block-busting saga of the reinstatement. The conference call could be to help clear up any other fogginess and uncertainty, before the AGM.

[Monty]

Diligent wins two Stevie awards for great customer service.

https://www.nzx.com/companies/DIL/announcements/251726

Meaningless to those chasing the share price, but I think it gives a good feel for the quality of the underlying business. They won a gold and a bronze Steve award the previous year.

Maybe meaningless - but nice to see the share price has climbed a little more today and is around $4.55.

maybe - just maybe we will see some strong activity over the coming months.

[Whipmoney]

I truly think we will.... unloved and out of favor for months now and many have been waiting for this coming quarterly to confirm growth is on track.
I am looking for a good run up to true value(5.50) after a positive quarterly as those who have been on the sidelines chase the few shares that are not tightly held.
If the quarterly is good don't be at all surprised to see Milford back in the market for shares.
They have indicated they are keen to get back in if everything stacks up. They will find it hard to build a stake in DIL now with 80% of it's shares tightly held but the markets have told them they did the right thing by selling out when the accountancy issues came to light @$7-8.
If milford do start buying it will put even more pressure on the SP and it will be $6 by year end IMHO.
DISC been happy to add to my holdings recently.

Snapiti - like you I am backing this one as I see little risk of downside as they are great company spitting cash with reasonable growth (25%+) projected ahead.

Just curious however as to how came to the 80% tightly held figure. Did you get a list of shareholders from your broker?

[MAC]

Diligent wins two Stevie awards for great customer service.

https://www.nzx.com/companies/DIL/announcements/251726

Meaningless to those chasing the share price, but I think it gives a good feel for the quality of the underlying business. They won a gold and a bronze Steve award the previous year.

It’s always a boost to the good folk behind the scenes to get an award, seems the sales folk and call centre folk are continuing to do what they do really very well too, doubt if they care what a restatement is or was.

All helps incrementally rebuild investor confidence, be nice to see DIL come back to valuation over the coming quarters, HY14 $5.80 in my view.

[blobbles]

Wow, huge volume day for DIL here, someone just dumped a cool million into their shares @4.64 off market. Looks like someone is buying up large...

[stoploss]

Wow, huge volume day for DIL here, someone just dumped a cool million into their shares @4.64 off market. Looks like someone is buying up large...

If someone dumped a million shares, could it be said someone is selling large ? Bearing in mind the price is lower 4.59/60 now , maybe they pumped it up on low volume to sell ?

[nextbigthing]

$1m worth 220000 shares roughly(maybe Milford trying to get a foot in the door)

Interesting. There was an order popped up for just under $1 mil of ATM after lunch which got pulled about the the same time that deal has gone through on DIL. Could be a coincidence or you could be onto something again Snap.

[Leica]

I am shedding a few on the enthusiasm (bought in at 55 cents). Still long too and holding a chunk in case of break

[iceman]

Interesting. There was an order popped up for just under $1 mil of ATM after lunch which got pulled about the the same time that deal has gone through on DIL. Could be a coincidence or you could be onto something again Snap.

Interesting observation nextbighting. I am hopeful that we have reached a stage now where they can put all the negativity behind them and start coming out with some more positive announcements. Lets hope it will happen at the Q1 announcement and the upcoming AGM.
If that was then followed by a confirmation that institutions, including Milford, were again buying, we can all relax and enjoy the ride ahead.
I firmly believe and hope we will never see $4 again for this stock, except after a split :p

[Baddarcy]

Milford disclose their holdings for some of their funds... the list below is from their active growth fund, i think the %ages are of the funds value not the overall holding in the company



Holdings (as at 31 May 2014)


Fletcher Building 5.5%
Steel & Tube 1.5%
Slater & Gordon 1.2%
Fisher & Paykel Healthcare 4.0%
Restaurant Brands 1.4%
Cardno 1.2%
Air New Zealand 2.8%
Auckland International Airport 1.4%
Corporate Travel Management 1.1%
The A2 Milk Company 2.7%
Delegat’s Group 1.4%
National Storage 0.9%
Wynyard Group 2.5%
Xero 1.3%
Vocation 0.7%
Kathmandu Holdings 2.3%
Contact Energy 0.9%
Summerset Group 2.1%
Skellerup 0.9%
Genesis Energy 2.0%
NZ Refining 0.9%
Other NZ & Australian Holdings 19.4%
EBOS Group 1.8%
Vend 0.7%
Bonds 5.5%
Complectus 1.7%
Global Equities 8.2%
NZX 1.7%
Other Unlisted Companies 3.6%
Tourism Holdings 1.5%

[Blue Horseshoe]

Total revenue of $US 19.1 million, up 40% year-over-year

Wow nice result dil, well done.:t_up:

[youngatheart]

Guidance of between $80.5 and $82m USD in revenue. That's roughly $93.5m - $$95.3m NZD.

So in other words, DIL has pretty much achieved what PEB hopes to do in 5 years time...

[Harvey Specter]

Guidance of between $80.5 and $82m USD in revenue. That's roughly $93.5m - $$95.3m NZD. Wow. That suggests an ARR of over NZ$100m - the same as Xero.

[youngatheart]

Live broadcast is here...
http://www.openbriefing.com/OB/1416.aspx (http://www.openbriefing.com/OB/1416.aspx)
though I'm not a fan of the gawdawful piano muzak in the meantime... Perhaps it's Alex playing? lol

[GizyGold]

That suggests an ARR of over NZ$100m - the same as Xero.
will be an interesting 12 months ahead comparing Dilligent and Xero. My bet is that guys who brought Dilligent recently will have a lot higher return come year end compared to Xero. Cash printing machine is all I can say!! watch over next 12 months as major funds take a position.

[Monty]

does anyone else notice that the line and quality of the conference call is bloody awful?

[youngatheart]

The current interim CFO sounds like one of the cast members of The Sopranos...lol!

[blah]

Also note that 97% retention rate has been dropped to 95% but nothing major there.

A good, solid result as always.

I thought the 97% was the customer retention rate - this 95% is the revenue retention rate. Should be highly correlated, but probably not the same thing. From the annual report - customer retention rate for 2013 is still 97%.

[GizyGold]

also question response apparently big opportunities for boardbooks in the Healthcare sector in the US, That would provide a massive boost..

[psychic]

Bit of a ho hum response SP wise...
?

[blobbles]

Bit of a ho hum response SP wise...
?

Poorer growth than I predicted and much higher op exp. Hope someone is asking why in the call! $48m in op exp for the year sucks TBH, a big pity they don't have it under control, is growing more than sales. Still not a terrible result. Anyone asking how European growth is going?

[Harvey Specter]

Milfie issuing an SSH would be quite a catalyst imho. Where the hell would they get 5% from. they will never go above 5% again is my guess.

That boat has sailed. They will get 5% in ikeGPS is my guess.

[youngatheart]

One caller asked what they would do with all that cash and I'm sure they said they would use it to fund growth and development. Also a NASDAQ listing was quashed because of the difficulties for NZ shareholders (?!?). Alex mentioned he couldn't really give specifics on their future marketing initiatives as competitors would quickly counteract. Also mentioned that the European call centre was up and running and that the size of the European market was equal to that of the US so lots of potential for growth there.

[fiasco]

Yip they said there are possibilities for a NASDAQ listing.

Agree, that tends to be one of the biggest barriers for Cloud solutions. Glad they have that up and running.

Very happy shareholder.

[blobbles]

I don't get how they can have an interest expense? Surely with ~$54 million in the bank, even at a nominal interest rate they should be earning ~$2m a year. Why are they recording a 15k loss???

If you aren't going to be using the money, at least let the money make you a bit of cash on the side...

[longy]

Really don't get it... As the company is making money but yet the share price dives. The longer term forcast is looking so so... Is this he reason why it diveing? Any thoughts some body...

[Meister]

I wouldn't even say the longer term forecast is 'so so'. This company is just transitioning out of extremely high growth into less strong growth. I feel like it is still (mildly) undervalued for its future potential.
Europe could be a new high growth area going forward, but even with settling growth I think it is slightly on the cheap side right now.

Only started holding recently though around $4, could be biased. I am also interested in what people are thinking. I didn't foresee the current slump in price...this announcement was fairly in line with expectations as far as I was concerned.

[zigzag]

I don't get how they can have an interest expense? Surely with ~$54 million in the bank, even at a nominal interest rate they should be earning ~$2m a year. Why are they recording a 15k loss???

If you aren't going to be using the money, at least let the money make you a bit of cash on the side...

Haven't had time to actually read the quarterly yet myself, but could this be interest on the preferential shares?

[longy]

I just topped up some more this morning.

Well this is how I'd see it.

The company just were forced through the reinstament and it seems to came through ok. Now the the first 1stQ is looking quite good. Ok the long term forecast is only about 28% gain or so. IMO it is not too bad. But the market seems to have higher expectation than me. But anyway... I am happy with the way it goes and it does has potential.

[winner69]

Well the excitement of a 'web cast' and the untethered anticipation of something good seems to have gone down like a lead balloon.

Moosie would say buy the rumour sell the fact or something likvhat

[Whipmoney]

I was watching the trading all afternoon and someone or insto was happy to pick up anything thrown at them at $4.40.
Lets see if that holds should do if the buyers are finally back in the market.

From my personal observations, Intos are rarely (if ever) buy first thing in the morning when results are announced and usually not even on the day as they have to update their models and get approval from their boards etc. If the price is dropping like it is in this case then it would make more sense for them to sit back and mop up the cheap shares in a careful process.

[Whipmoney]

that sounds about right...... from what i saw today 150000 shares traded in the morning driving the price from a high of 4.70 down to 4.40 then over 200000 shares traded at about the 4.40 support.
Next week will be a telling week for the short term DIL share price.
IMHO 4.40 or higher needs to hold next week, on good volume, to indicate insto's are back buying.

I guess we won't know until post-AGM and even then the process would take a week or two before we could likely confirm or deny insto activity.

I'm curious as to the high number of sellers yesterday, I guess there's a few possibilities:

A) A large number of people have been frustrated by DIL's performance to date and saw an opportunity to get out.

B) Traders bought in earlier in the week at circa $4.20 then were quick to profit-take from $4.70 down to $4.40.

C) Or a decent percentage of holders were genuinely dissapointed with the results and were expecting results more akin to the large growth numbers in the FY12 quarterlies.


A & B I can understand but I struggle to comprehend C. It was pretty clear where the company is heading performance wise and the super-extraordinary growth numbers of previous years have now settled down. That being said the company is performing great and is continuing to growth at supernormal growth levels (i.e. 25% p.a). The only other explaination is that some punters were still holding out for a product or nasdaq listing annoucement.

Either way i'm not worried. The DCF numbers speak for themselves and the company is doing great and is still substantially undervalued. I look forward to the day when they find a use for their cash.

[kizame]

I don't get your point on good news on growth required moosie.
Even with slowing growth the rate is still very good so it seems to me, given how tightly the shares continue to be held, you are among the minority that are still expecting to see 40-50% growth yoy before the share price move's up.
That's long gone and DIL does not need to grow at such rates to put upwards pressure on the share price.
I think you need to catch up with where DIL is as a business and if you are waiting for DIL to return to the same growth levels of the past 2 years don't bother.
The company have issued forward guidance, which is slower than the past but still very good for the business especially based on their margins.
DIL has moved from a high growth enterprise into a medium growth profitable business.
I am up for a bet with you that DIL close's above $5 a share by the end of the year.
Are you keen.

Sorry but I'm inclined to agree with Moosie.
Growth, athough great is still slowing,lets not forget that this company at worst at the moment is growing at say conservatively 30% per annum,historic PE is sitting on 60,where the norm was for a growth company at Dils current rate to be around a PE of 24.
I.e similar to RYM. Especially with what has happened and nothing new going forward.
It could be a case of a steady slow rerating as confidence comes back,Time will tell.

[sommelier]

What is the current PE? at $4.40, 'adjusted net income' EPS was US$0.04, or NZ$0.05, which annualised is NZ$0.20, a PE of 22. Have I done something wrong here? Because if they are continuing at around 30% growth, and can translate that to net income, then this seems like a bargain. With 30% income growth this year, the average will be 4*(1.15*0.05)=NZ$0.23 annualised, or PE of 19. Some of you seem to expect that their margins will increase, but it looks like even if they don't increase we are looking at a cheap growth tech company. So long as they can sort themselves out and the net income doesn't have to be 'adjusted' by 60% every year, which actually translates directly to stock dilution anyway.

"Adjusted net income is calculated as GAAP net income excluding the impacts of non cash stock based compensation, costs associated with the investigation and restatement of our historical financial statements, and other costs, such as the CEO’s replacement awards and restatement bonuses, net of tax."

Disc. Probably going to buy on Monday.

[Harvey Specter]

The power companies are on a PE of 20. DIL is still growing with an improving GP %.

[winner69]

Was 113 (net) new license agreements in the quarter good or bad?

Seems a bit light to me and can remember the last few quarters numbers

[zigzag]

Sommelier, read the quarterly again, specifically the forecast part. Unfortunately, 30% growth would be on the high side!

Snapiti, I pointed out all those other things as growth is the only thing DIL has going for it. You are not going to see that cash in divvy form in the short to medium term, so what else do you rely upon for returns? Capital growth! If DIL has slowing growth, what else is going to hold up the price? Hopes and prayers? That's for the PEB'ers bud!

Sorry to say it but do I need to post the slowing growth chart up yet again? The market is telling you something here; best to listen. ;)

The 2012 yr sales figure was 40 mill. Their 2014 outlook is 80 mill. On what planet is this not a growth company?

[Whipmoney]

Snapiti, I pointed out all those other things as growth is the only thing DIL has going for it. You are not going to see that cash in divvy form in the short to medium term, so what else do you rely upon for returns? Capital growth! If DIL has slowing growth, what else is going to hold up the price? Hopes and prayers? That's for the PEB'ers bud!


Moosie - based on this post it seems that your understanding of stock valuations is very limited at best.

1) Growth (or more specifically revenue growth) is not the only thing that DIL has going for it. Aside from qualitative things like their product, IP, their addressable market etc, quantitatively it generates a significant level of cash-flow and has a negative cash-flow cycle (i.e. receives cash up front before rendering services).

DIL's ability to generate cash is a wonderous thing and very very few SaaS (or even Tech) companies exhibit this quality. That cash can be retained on the balance sheet (i.e. invested in risk-free assets) until such time as the company sees fit to either invest in growth (via product development or acquisition) or return it to the shareholders in the event that the company is unable to generate a return on that cash better than their cost of equity.

Any modern textbook on Corporate Valuation will outline that when a company invests/parks their cash in government treasuries then it isn't actually harming the underlying value of the company that cash is generating a near "'risk-free" return and therefore it is an efficient use of cash.

Personally I'm not too fussed about the company undertaking a buyback or providing a dividend as it seems like they are stockpiling their cash for greater things (i.e. possibly a large USD $100m+ acquisition is ahead).


2) You state "what else do you rely on for returns.. Capital Growth"?

I'm not sure what you actually mean here because as long as the company is growing at a rate above 0 then its future value at a given point in time will always be higher than its present value. As such the share will always appreciate through time and you will get capital growth.

Also, a typical/standard DCF calculation simply provides a Present Value of all future free cash-flow streams. This means that a DCF valuation actually excludes the cash on the balance sheet and any opportunities associated with it.

Given that DIL is presently trading below is DCF valuation ($5-$5.50) then the cash on the balance sheet is a freebie.


3) You state (in red) that if DIL has slowing growth what else is going to hold it up?

As I stated above, as long as DIL is growing period then it will always have a higher instrinsic value in the future.

Even if DIL has zero growth and simply spit out a set amount of free-cash flow every year for perpertuity then it would still have a set present value which should in essence serve as the worst case scenario for DIL.


So lets summarise:

A) DIL is still growing at supernormal rates (i.e. above a sustainable long-term growth rate).

B) Even though DIL's growth rate may be slowing in percentage terms it is still generally adding on a higher level of absolute revenue each year. I.e. the pies getting bigger so its getting harder to add 30% slices.

C) DIL generates a great level of FCFF (which is growing), its margins are improving and many of its one-off costs should now be long gone.

D) DIL has over $60m on its balance sheet which it can spend, return or stockpile for future acquisitions. This doesn't harm the shareholder as the option for all three is still there. In fact by returning all this cash to shareholders then it simply eliminates the other two options therefore lowering its overall growth potential.

[Whipmoney]

Remember, the market is always right, even when its wrong ;)

I know this has been argued time and time again and depends on your school of thought really.. but I prefer to take the side of Benjamin Graham and definitely believe his analogy of Mr Market is pretty fitting:

http://en.wikipedia.org/wiki/Mr._Market

The market is manic-depressive. No offense but I only need to look at several your posts to see this. People are either ravingly fanatic about a stock they are bullish on or are exhibiting signs of aggressive disdain to others that they are bearish on.

As such I think Benjamin Graham is right.. Mr Market is generally wrong and given that he's not going anywhere, on any given day/week/month/year you don't actually have to listen to him.

You can stand your ground, refuse to deal with his unreasonable requests (i.e. please sell me a share at a massive discount) and wait until he comes back to the table with an acceptable offer.

You see I think technical anyalsis is largely wrong, sure it provides a good summary of past behaviour/sentiment however I think all that can change in a second and therefore there are only really two ways of viewing the market.

1) On a fundamental basis. Ignore the market and look at the stock. If the company's prospects are great and its going cheap then you buy, hold and wait for the market to get its sh*t together. Once the market has come round and stock is over-valued the you sell it and maybe consider rebuying when its undervalued again. This is essentially the Buffet Methodology.


2) On a behavioural basis. Through a combination of understanding a company's fundamentals and technicals and understanding how the market will react to given fundamental events (e.g. earnings announcements) behaviourally then once can begin to make predictions on what will happen and trade/invest accordingly.
This is more akin to thet George Soros methodology.

The difference between both of the above and pure technical analysis is that the above are both foward focused, whereas pure TA relies on using the past as a guide to the future.

[Balance]

Looking pretty range bound until we get some growth. DCF and EPS will put a solid floor beneath DIL, but no buybacks, divvy, nasdaq listing, new product (an ACTUAL one!) or reversal of the slowing growth rate means $4-$5 is pretty much the new norm. Until we get some good news on growth, this puppy is stuck!

Moosie, have a look at Sky TV. You will get your answer about how high growth companies evolve into cash flow and profit driven companies.

G

[GizyGold]

some great posts above!! cheers.

I think the reinstatement process has been the big factor and many people in NZ have lost faith, even the funds are nervous. If you look at the future global outlook, fundamentals and alternative investments on offer then this is a easy buy. I dont want a dividend, much rather tax free capital gains. And like you mentioned Simon the NASDAQ listing is def going to happen within 5 years. End of year 5, I reckon this stock would be worth circa $ 20.

[winner69]

Moosie, have a look at Sky TV. You will get your answer about how high growth companies evolve into cash flow and profit driven companies.

G

I think that DIL is already at this state, barring some fantastic new product.

A bit of an effort getting all the restated quarterly numbers back into my model.

But what it does show is both revenues / receipts definitely flattening out at maybe a 'mature' level and that the only growth is in the expense line.

Revenue guidance given is a bit of a worry. Q1 was $19.1m and they say Q2 is going to be about $20m with FY just over $80m. That sort of says the next 2 quarters are going to be about $21m each. If so Q4 will only be 15% up on pcp but little increase from the prior few quarters....and if this 'steady state' continues even 20% pa growth looks a dream going forward. One can paint the same picture for total receipts (reported revenues plus ideferred revenues) as well ... FY at say $94m

Earnings growth in 14 to come from hopefully not having any more special one off costs (or less than last year) and probable margin expansion (although that does not seem apparent at the moment). The saviour has to be a fantastic new product.

My numbers come up with a FCF of $32m - $35m this year. Based on what we know and what they say it is hard to justify attributing much growth to that going forward (steady state incremental gains awaiting that new fantastic product)

Putting all that in a DCF I come up (would you believe it) of $4.40 (on the 120 mill share number)

I need convincing that 20%pa or more is going to happen into the future. Maybe we have a SKY model already







I

[Roadrunner]

Looking forward to attending DILs agm on Tuesday with my partner.I`ve been reading all the recent posts with interest and first of all I was pleased with the restated quarterly numbers and was not in the slightest bit disappointed.In my view Sodi was right it was a solid result.I think that the projected revenue guidance is deliberately on the very conservative side...why?Well as we all know it`s been a pretty dismal period for Diligent during this restatement carry on.We have been let down on more than one occasion.The directors know that they have got to do some serious bridge-building with the shareholders and rather than post sky high projections they have been sensible and will surpass these with ease and hey presto the market will love it and we will all make money...woe betide any more disappointments or stuff ups.I think the recent Windows 8.1 app and the new data centre in Germany will look after the growth alone,not forgetting that the euro marketplace is as big as the US.I do agree with some of you that we need this new product very soon and seeing that dividends and share buybacks are not happening an aquisition or two.Having a big pile of cash is all well and good but the board have been pondering how to use this for a bit too long in my view.We need some action!!and maybe...just maybe this agm is where it starts.It may be just pure coincidence but getting the Q1 result out on Friday before the agm with a teleconference was all well planned.Put the restatement to bed,get the numbers out there and clear the way for an announcement at the agm.I could be totally wrong but either way I cannot see the SP staying down at bargain basement levels for too much longer :)

[iceman]

Have duly noted others comments and will not turn into the pariah of the DIL thread like someone else on PEB.

Just 1 question though. If DIL is do cheap and has been for oh so long, and we now have forecasts, why, in a forward looking market, is the sp still in the hospital bed? See where this week takes us eh?

Food for thought for now ;)

I think many of us don't give a stuff about where this "week takes us". Lets see where the next couple of years take us I say !

[couta1]

I think many of us don't give a stuff about where this "week takes us". Lets see where the next couple of years take us I say !
Well said iceman and the same goes for Xro,SLI,PEB,ATM,WYN and now apparently even The Warehouse:eek2:

[sommelier]

Renewed contract with Sodi has a 500k USD base salary, 350k bonuses plus an 850k golden handshake if he leaves. I hope he doesn't leave..

[sommelier]

And they've just allotted 1.3% of the company in options at current price, in USD. I guess part of being in the US corporate world is offering US corporate compensation. That 1.29% is exercisable in quarters, annually.

[Whipmoney]

Have duly noted others comments and will not turn into the pariah of the DIL thread like someone else on PEB.

Just 1 question though. If DIL is do cheap and has been for oh so long, and we now have forecasts, why, in a forward looking market, is the sp still in the hospital bed? See where this week takes us eh?

Food for thought for now ;)


Because the market isn't always right..?

[Balance]

Have duly noted others comments and will not turn into the pariah of the DIL thread like someone else on PEB.

Just 1 question though. If DIL is do cheap and has been for oh so long, and we now have forecasts, why, in a forward looking market, is the sp still in the hospital bed? See where this week takes us eh?

Food for thought for now ;)

Answer can be found easily - why did DIL's sp stayed below $1 for so long a few years ago?

[psychic]

Nice work if you can get it...
New Employment agreement for CEO Sodi.

https://www.nzx.com/files/attachments/195729.pdf

Is this a change from receiving a ridiculous amount of cheap shares each year to a salary only?


Edit : Sorry, somehow missed sommelier post above

[Whipmoney]

Nice work if you can get it...
New Employment agreement for CEO Sodi.

https://www.nzx.com/files/attachments/195729.pdf

Is this a change from receiving a ridiculous amount of cheap shares each year to a salary only?


Edit : Sorry, somehow missed sommelier post above

Actually I had a look back to his previous compensation and it looks like his base salary has come down around $167k or so.

I couldn't find much mention of new options in that agreement (admittedly I only had the time to skim read it) but there was talk of vesting his existing options.

Is today's option announcement simply the follow through of the company's previous agreement to fulfill options that were issued to him under a past agreement?

[psychic]

I didn't read that he was entitled to options in addition to the salary and bonuses.
I thought these new options were perhaps for staff?

[psychic]

So is this a concern? Why would Sodi want to shift to a salary and cash bonus only remuneration package instead of cheap shares?

[Whipmoney]

I didn't read that he was entitled to options in addition to the salary and bonuses.
I thought these new options were perhaps for staff?

That's what I mean. I couldn't see any reference to new options either which means his overall pay packet has come down significantly.

I was assuming that today's options were to tidy up any legacy issues relating to the options saga that occurred some time back.

Otherwise they are for staff incentive packages?

[Baddarcy]

Personally not expecting much news, verging on nothing new at all, from today AGM. Anyone feel any different?

[Whipmoney]

Personally not expecting much news, verging on nothing new at all, from today AGM. Anyone feel any different?

Yeah i'm going in there with low expectations but hopeful of some clarity around the nasdaq play.

[zigzag]

Maybe an update on European business, are they getting any traction yet, or is it still too early to say. I also just like to get a general feeling as to how things are tracking now that the re-instatement is behind us.

[Baddarcy]

Maybe an update on European business, are they getting any traction yet, or is it still too early to say. I also just like to get a general feeling as to how things are tracking now that the re-instatement is behind us.

This is a good point, NOT having to talk about the restatement will be pleasant !

[Monty]

does anyone know if there is a webcast of the AGM?
Just thinking back to a year ago at the last AGM. The share price was around $7 and everything was looking very bright and rosy. There was new product in the pipeline - still no word on status, there were rumours of a NASDAQ listing - still no confirmation;

Yet the fundamentals remain good with a lot of money in the bank, high retention, and a growing market.

I am very interested in what if anything comes out of the AGM today.

whoops found it


Live Webcast

A live webcast of the Annual Meeting and a copy of the presentation given at the Annual Meeting (including the Chairman’s and CEO’s address) will be accessible from the investor relations section of Diligent's website at http://www.boardbooks.com/investor-relations/events-presentations/ .

[iceman]

Like the rest of you commenting this morning I am not expecting any earth shattering news from this AGM.
Obviously they want to confirm they have completely and finally put the restatement process to bed and are now looking ahead to growing the business.

Some positive comments on European progression would be welcome. Ditto any positive comments on a new product or Nasdaq listing, but I don't expect them here now. Nasdaq listing has in my view been put back quite a bit due to the restatement fiasco.

What they could do and would put a smile on suffering shareholder's faces is if they came out with a surprise announcement about what they are going to do with all that cash, either an acquisition or a small share buyback. But again I am not expecting it !

So possibly rather a dull affair it may be. Would appreciate if someone attending/watching could be kind enough to give some feedback on what they thought was of interest !

[Baddarcy]

Doesn't seem to be any urgency in providing the text of the speeches to the NZX....

[iceman]

Doesn't seem to be any urgency in providing the text of the speeches to the NZX....
They must have heard you. There now !

[Baddarcy]

Nothing much that caught my eye in there.

[MAC]

It’s always a boost to the good folk behind the scenes to get an award, seems the sales folk and call centre folk are continuing to do what they do really very well too, doubt if they care what a restatement is or was.

All helps incrementally rebuild investor confidence, be nice to see DIL come back to valuation over the coming quarters, HY14 $5.80 in my view.

Seems about fair to me ;)

http://www.scoop.co.nz/stories/BU1406/S00800/diligent-earnings-outlook-cut-on-mounting-costs-craigs.htm

[blobbles]

This is what I have been harping on about. There administration costs are way too big having gone up way too fast in the last year. It's not good when your OpExp outgrows your revenue, particularly if you are a SaaS company. I would be grilling them severely on this if I could attend the AGM.

OpExp looks like $48-$50m up from this year and growing, an absolutely gob smackingly terrible result. Up from $21m in 2012.

[youngatheart]

I'm out. Nothing new happening here and they've made it very clear that they will not disclose anything new today... Feels like a great opportunity to announce a nice surprise, wasted. What's next in the near future to increase the SP then?

[Monty]

well that was an anti-climax

[winner69]

shareprice with a 3 in fron soon

No real future growth in the forecast revenues either .... $20m a quarter going forward seems the norm

Words and performance don't seem to gel and that's a worry

Hope ain't a strategy

[youngatheart]

The general tone of the conference seemed to be flat, with no sense of urgency. I can't believe that while all of its shareholders attention was focussed on today they left us nothing to boost our morale and show that a new era (post restatements) had occurred now. Nothing, nada. Just the strange belief that sales will automatically increase because of its superior product and that we only need to focus on doing more of the same.

[Meister]

They reiterated that there is big potential for growth still, for example in europe, which they are investing towards. They are not just standing around doing nothing. Their datacenter is up and running and they do have a great product, I see no reason why they won't be able to achieve any growth

People seem to be expecting massive changes but DIL is undervalued for what it is achieving. Their forecast growth rate for the year is my only concern, but that could just be them being conservative...

[Bilbo]

sure did seem flat but they are confident they are backing the right product and developing that further is not a bad plan.

I sort of agree here. I love it when a competitor backs a new product and takes their eye off an existing product as it opens the door for me. Stick to your knitting etc. How would you feel if Ryman decided to go after the first time buyer apartment market in Auckland rather than focusing on retirement villages in NZ/AU? I know I'd consider selling up and buying MET if that happened :)

DIL believe they current have a 2.5% market share of the addressable market and that market is growing. Surely better to target that with a product that has been proven than going off chasing something new?

[Amor Fati]

As expected, steady as she goes, big relief the reinstatement out if way, focusing on moving and growing forward, still only have very small market share. This was not the time for big news.
Talked with Alex Sodi, they are bound by US law about what they can and can not say. Dil can not make noises, inferences, claims, plant seeds about anything that is not concrete including talking it up. I mean this is the good old US of A, you say anything that can be misconstrued they will sue your a--, Americans understand this, we seem to run with hype no matter how it is served. All in all no bad news, reading between the lines, Nasdaq definitely on the cards, but prob not this year.
All just my opinion.

don't shoot the dog just because it crapped on the carpet!

[Schrodinger]

Time to pile in then? Oracle of Auckland

[Xerof]

Time to pile in then? Oracle of Auckland

Lol, yes, world famous in Auckland. They aren't required to declare until they hit 5%, but I guess their monthly reports might include a comment or declaration of some sort.

This tech-wreck doesn't seem to be dissipating for now, so I am on the sidelines (other than Gentrack IPO, which I am hoping will go better than todays tragedy)

[Whipmoney]

Is it correct that Brian Gaynor was present at the meeting, and voting on his shares held? I thought he sold out. If true that he was there, I'd love to know when he bought back into Diligent?

He might of been but I didn't see him and probably would of recognised him. Both Peter Huljich and his father Chris Huljich were there however.



Can someone actually confirm if Gaynor was there however as it is rampant speculation otherwise..

[Harvey Specter]

Is it correct that Brian Gaynor was present at the meeting, and voting on his shares held? I thought he sold out. If true that he was there, I'd love to know when he bought back into Diligent?


He might of been but I didn't see him and probably would of recognised him. Both Peter Huljich and his father Chris Huljich were there however.



Can someone actually confirm if Gaynor was there however as it is rampant speculation otherwise..They may keep little holdings of everything, just to get an invites etc.

[Baddarcy]

This is from Stuff.co.nz a few hours ago....

----------------------

Listed software company Diligent is saying coy about a new product, downplaying questions at its annual meeting in Auckland today.

The corporate-governance software-maker has previously hinted at a new product in the pipeline to complement its core Boardbooks product.

Chief executive Alessandro Sodi said Diligent was accelerating research and development in product initiatives, but he was tight-lipped on the time frame for launch, and reluctant to give any other details.

"From a competitive standpoint, it doesn't make sense to discuss it," Sodi said.

"We're not giving any dates."

Diligent's share price fell 1.2 per cent to $4.20 in morning trading, and has dropped 40 per cent over the last 12 months.

Sodi said it was important to understand there was still a lot of opportunity within the existing Boardbooks product.

Diligent's customer base of 2500 was just a small fraction of the potential market, with more than 100,000 targetable public and private companies.

Asked what the company would do with the growing stash of cash on its balance sheet, chairman David Liptak said it was likely to be used for growth initiatives.

Shareholders were silent on Diligent's accounting troubles over the last year, which forced it to restate its accounts line by line going back to 2010.

Investors piled out of the stock after repeated delays in the restatements, sending the share price as low as $2.76, from highs above $8 last year.

Last week Diligent reported first-quarter adjusted net profit of US$4.6 million (NZ$5.3m), up 45 per cent.

Sodi forecast revenues for the 2014 year would rise by 24 per cent to 27 per cent to reach US$80.5m to US$82m.

[Whipmoney]

They may keep little holdings of everything, just to get an invites etc.

Who the Huljich's? I'm sure they have a sizeable holding.

I was quite amused about one elderley couple who went to the effort of blatantly snagging handfuls of after-dinner mints and stuffing them in their pockets.

[Whipmoney]

Why the hell did noone ask about the restatement? Good god Kiwis are freakin complacent sometimes!

Ask what exactly?

[Theracay]

Wasn't Mr gaynor on the right side seating near the back corner? Or was I mistaken.

[Harvey Specter]

Who the Huljich's? I'm sure they have a sizeable holding.I was refering the the Milford funds.

[Whipmoney]

Wasn't Mr gaynor on the right side seating near the back corner? Or was I mistaken.

Chris Huljich etc was in the back right corner on the side of the room that was directly in front of the stage. I'm not sure who was accompanying him but it certainly wasn't Mr Gaynor.

I couldn't see around to the leftern flank of the room, which Peter Huljich was sitting on.

[zigzag]

Who the Huljich's? I'm sure they have a sizeable holding.

I was quite amused about one elderley couple who went to the effort of blatantly snagging handfuls of after-dinner mints and stuffing them in their pockets.

Yeah. That was roadrunner and his partner. It's a long drive back to Palmerston North.

[Roadrunner]

Yeah. That was roadrunner and his partner. It's a long drive back to Palmerston North.

Haha!classic....Good to catch up with you guys again :)Things must be looking up as it was held upstairs in a posher suite this time,some tasty canapes,nice music playing a view of the sea and a more relaxed atmosphere!Not long back in Balmy Palmy so a bit knackered.No new product or indication of how they would use the cash so I was wrong but I came out of the meeting upbeat about the future of this company nonetheless.Will post tomorrow!

[Carpenterjoe]

So Q2 highlights are due out in three weeks or less?

[SimonHouse]

I seem to recall some rigmarole over Brian Gaynor selling out over Diligent's restatement issues. While it's a good sign he bought back in, it does seem a bit dubious that he sold down, spoke negatively about Diligent, and then quietly bought back in.

[nextbigthing]

I seem to recall some rigmarole over Brian Gaynor selling out over Diligent's restatement issues. While it's a good sign he bought back in, it does seem a bit dubious that he sold down, spoke negatively about Diligent, and then quietly bought back in.

Are you 100% sure he has bought back in again? I thought it was just speculation so far. Just because he was supposedly there doesn't necessarily mean he is back in (although it obviously means he's still watching closely).

[blackcap]

If he was at the AGM, and voting, I'd call that confirmation

Having 200 shares in his own account also entitles him to be there and vote. Not saying Milford have not bought back in, but he may have been there on an info gathering mission or just a good excuse to chew the fat with some of the DIL directors?

[winner69]

Having 200 shares in his own account also entitles him to be there and vote. Not saying Milford have not bought back in, but he may have been there on an info gathering mission or just a good excuse to chew the fat with some of the DIL directors?

One would think that with the billions they have invested across so many funds there would be some DIL there somewhere (even the ones the Queen owns) - after all a NZX50 company you know

Or he may have just been somebodies proxy

[Whipmoney]

I seem to recall some rigmarole over Brian Gaynor selling out over Diligent's restatement issues. While it's a good sign he bought back in, it does seem a bit dubious that he sold down, spoke negatively about Diligent, and then quietly bought back in.

SimonHouse - Noone's even confirmed that he was there yet so don't be too hasty to connect the dots..

[iceman]

Well this from the NBR today is as close as Mr Sodi has come to confirming NASDAQ is on the cards isn't it ?

Mr Sodi told NBR that a shift to the NASDAQ would not be to raise capital, but to better organise the company structure.
“It is more about simplifying the governance of the company - versus having dual reporting” he said
“We recognise some of the funds invested, would have to exit NZ shareholders, we’re aware of that. But it is something the board and the company is taking into consideration”

[youngatheart]

If a Nasdaq listing is to occur, what will that mean for NZ shareholders?

[psychic]

If a Nasdaq listing is to occur, what will that mean for NZ shareholders?

We will all be filthy rich apparently. :)

DIL's jump to the NASDAQ has been talked about and pumped on this thread since the beginning of time.

Personally, I have no idea.

[Brain]

The chap sitting in front of me looked a hell of a lot like Brian Gaynor. If it wasn't him then it was a pretty good impersonation.
He was last into the meeting and first to leave. It was almost as if he didn't want to be seen. I think he needs to work on a set of disguises.

Brain

[Joshuatree]

Hit $4.02 today ;if it breaks under$4 where will it stop!

[winner69]

One would have to say that a 13% drop since just before the much anticipated webcast last Friday and AGM is telling.

Didn't really provide much for anybody to get excited about - if anything the guidance was a real disappointment

[nextbigthing]

Apologies for the off topic nature of this post but I don't think it justifies a whole new thread anywhere. Can anyone recommend a good book that covers market psychology and big boy tricks such as this cap and accumulate above?

[nextbigthing]

classic insto trading pattern... large sell order came into the market yesterday afternoon @ 4.20 same again today.
This is manipulation at it's best and is an attempt to flush out the weak hands.
watch the sell orders under 4.20 being snapped up.
someone wants a piece of DIL.

The plot thickens Snapiti. This is exactly what has been happening with ATM and through the SSH releases we can confirm it has been Milford buying. Therefore if the same technique is being used here.... well.

disc) Hold ATM, no DIL.

[winner69]

NBT, check out the AD indicator here:

http://www.profitabletrading.com/education/technical-indicators/technical-indicators-accumulationdistribution

You can also watch for SSH notices (re: MBE and ATM) to see what prices they are buying/selling at. Watching intraday depth is also very telling when capping is ongoing.

Umm .....price falling and AD falling (ft.com)

That not good is it moosie?

Still learning

[Whipmoney]

Yip, the big boys be distributing! Another good one to use is DMI showing the strength of buyers vs sellers and how strong that actual trend is. DMI crossings are usually powerful signals to the market (although they can offer up head/bottom fakes just like any other indicator).

Big players are selling?

realistically there should be a floor price based on the funamental value of their existing cash-flow streams with only a minimal growth factor included.

I'm not too bothered, I think the next quarterlys should spark an increase from here. Might be a good time to accumulate more on the cheap.

[youngatheart]

Exactly and concisely why I'm glad I sold out 2 days ago. Once bitten twice shy.

[Xerof]

I wish you lot who like to spam these threads with hourly perpectives would make your minds up.

One minute the big boys accumulating and using phantom capping offers to frighten the locals into selling

nek minit

they are allegedly distributing,

but then, even more incredulously, the register is so tightly held there shouldn't be (m)any shares available for sale.

So who exactly assisted with the massive sell down? Why, Milford, Hujlich and Morgan of course, a few of the so called big boys.

[winner69]

Xerof - So who exactly assisted with the massive sell down? Why, Milford, Hujlich and Morgan of course, a few of the so called big boys

One of these buy or sell the 270 shares so far today

I sometimes wonder that to be a trader you need a vivid imagination and see things that don't exist

[Tony Two Gloves]

Ha Winner that is adzactly what you need! I personally think TA with this stock is a waste of time bearing in mind where the majority of shares are held and that this stock is in a transformation stage. I Have a reasonable holding in this stock and will definitely accumulate more under $4 which I think may be today!

[Whipmoney]

EPS and cash in hand may provide a floor, but it certainly isn't going to result in growth, unless it is utilised. Cold comfort when there is no divvy to fall back on, no buyback to up the SP and growth, the driver of the SP, is slowing!

To be honest they don't really need to utilise their cash in order to achieve growth. It is evident that growth is recurring concurrently to them stacking the benjamins and to be honest I'm always curious as to why people balk at a paltry 25%+ level of growth in revenue.

Removing cash from the equation (as a DCF model does) even with moderately declining levels of YoY growth (which please remember is in % terms not absolute terms) the pie is still growing and so is its ability to generate cash. If they can achieve another few years at 25%, 22%, 20%, 15% and 10% growth (respectively) then the PIE will grow a lot and so will the cash on balance sheet.

It is THIS which provides a reasonable level of fundamental value and which should (at least in theory) provide for some level of capital growth (particuarly at current prices).

Now on top of the natural growth you have $60.6m USD option in place which can provide an additional return either by way improved growth prospects (via acquisition, R&D in a new product line or ramped marketing spend) or simply through a return to the shareholder through a buy-back.

Just because the buy-back/dividend option is presently removed from the table it doesn't mean that this will always be the case. In fact if they can't find a decent use for the cash in the next 12 months then its highly likely that they will have to pursue these options to appease shareholders.

[winner69]

Nobody ever seems to comment on Rod Dukes ever increasing cash pile at BGR .... (mind you he has wasted some of it on not so good acquisitions)

As you say Whip cash does not hinder growth on a day to day basis

[Hoop]

Ha Winner that is adzactly what you need! I personally think TA with this stock is a waste of time bearing in mind where the majority of shares are held and that this stock is in a transformation stage. I Have a reasonable holding in this stock and will definitely accumulate more under $4 which I think may be today!

After all the failed breakout attempts...if DIL drops below the 4 bucks support it won't be a good look ..eh?...To some it will be a good look as there is always a buyer somewhere in the Marketplace.

http://i458.photobucket.com/albums/qq306/Hoop_1/DIL26062014.png (http://s458.photobucket.com/user/Hoop_1/media/DIL26062014.png.html)

[zigzag]

I wish you lot who like to spam these threads with hourly perpectives would make your minds up.

One minute the big boys accumulating and using phantom capping offers to frighten the locals into selling

nek minit

they are allegedly distributing,

but then, even more incredulously, the register is so tightly held there shouldn't be (m)any shares available for sale.

So who exactly assisted with the massive sell down? Why, Milford, Hujlich and Morgan of course, a few of the so called big boys.

Some of the posters who hang out on this thread remind me of the weatherman. They change minds every time they look out the window.

[dingoNZ]

I heard that my handle was used at the DIL AGM to specifically denote an "annoying" poster.

I see this as good as it forces others to think outside the box as to why they think the SP should be going up but it's actually going the other way! If I help out others by being "annoying", my job has been done imho!


It was actually mentioned at the AGM? *Highfive*

[winner69]

Maybe when I said traders need heaps of imagination I meant the short term / day trader type.

As Hoop chart shows following longer term primary trends is pretty straight forward.

That's my game ...this intraday / day to day stuff is just too complicated.

Even the longish term AD line is insightful to some extent. For most of the time DIL has been in that range $4 - $4.70 the AD line was going up ......a divergence to price action signalling punters were accumulating.

But the last week even both the AD and the price lines are heading south .....not a good sign.

But then other punters are buying ....so it all becomes too complicated for simpletons like me.

Fundamentally, if that ever means anything, DIL worth more than $4 on a DCF basis but that Buffet (attributed to) methodology valuation of $3.33 still haunts me. But then Sparks said its worth $10 or something stupid - wonder 'what he was smokin' at the time

[robbo24]

Maybe when I said traders need heaps of imagination I meant the short term / day trader type.

As Hoop chart shows following longer term primary trends is pretty straight forward.

That's my game ...this intraday / day to day stuff is just too complicated.

Even the longish term AD line is insightful to some extent. For most of the time DIL has been in that range $4 - $4.70 the AD line was going up ......a divergence to price action signalling punters were accumulating.

But the last week even both the AD and the price lines are heading south .....not a good sign.

But then other punters are buying ....so it all becomes too complicated for simpletons like me.

Fundamentally, if that ever means anything, DIL worth more than $4 on a DCF basis but that Buffet (attributed to) methodology valuation of $3.33 still haunts me. But then Sparks said its worth $10 or something stupid - wonder 'what he was smokin' at the time

Probably some diesel soaked rags wrapped in plastic shopping bags.

[Tony Two Gloves]

Thanks for the chart Hoop, but I think even it does break through $4 it won't be disastrous as this stock has to many positives to go much lower, any good news will see it break out above $4.70. All the short term traders should almost be done by now as I can't see them still holding at $4.

I am guilty of being a lurker on this post but have to agree with the weather comment....so Moosie my old SNK buddie, are you holding DIL or what???

[longy]

Thanks for the chart Hoop, but I think even it does break through $4 it won't be disastrous as this stock has to many positives to go much lower, any good news will see it break out above $4.70. All the short term traders should almost be done by now as I can't see them still holding at $4.

I am guilty of being a lurker on this post but have to agree with the weather comment....so Moosie my old SNK buddie, are you holding DIL or what???


How could you guys tell that the big players are distributing? Is it because the sp is sliding sideway?

[blobbles]

Maybe when I said traders need heaps of imagination I meant the short term / day trader type.

As Hoop chart shows following longer term primary trends is pretty straight forward.

That's my game ...this intraday / day to day stuff is just too complicated.

Even the longish term AD line is insightful to some extent. For most of the time DIL has been in that range $4 - $4.70 the AD line was going up ......a divergence to price action signalling punters were accumulating.

But the last week even both the AD and the price lines are heading south .....not a good sign.

But then other punters are buying ....so it all becomes too complicated for simpletons like me.

Fundamentally, if that ever means anything, DIL worth more than $4 on a DCF basis but that Buffet (attributed to) methodology valuation of $3.33 still haunts me. But then Sparks said its worth $10 or something stupid - wonder 'what he was smokin' at the time

Remember that Sparky had stated this when growth was around 65% and OpExp hadn't blown out. Forward looking, I had a similar valuation.

However now we have a 25% growth rate, maybe (yet claims the market is not saturated meaning it should still be around 60-80% especially with the new European market entry), management claiming they are keeping cash for growth (same story for 2 1/2 years, but no action), OpExp growing around 100% a year even AFTER the restatement, no movement on the NASDAQ listing (same story for another 2 years) while management is rewarding themselves with fatter and fatter pay checks and bigger/nicer offices. Margins are shrinking much more than they should be [EDIT: Margins aren't GROWING as much as they should be, sorry!]. Just for comparison 2 years ago we had EPS of 6c, likely this year they will be 11-12c. Over the same time revenues have more than doubled. For a cloud computing firm, there earnings should be much higher than their revenue growth as the cost of doing business should be on a diminishing scale. For every new customer they get, they should be spending less per customer. But they aren't, they are increasing their OpExp at the same rate as their revenue if not more.

They keep trumpeting their graph (page 7 of the Investor Presentation) which shows their revenue growth vs the cost of doing business and their increasing margin. What they fail to include in that graph is the growth in their OpExp. Conveniently leaving this out does not fool shareholders when they see the numbers further down the report. And that is why the SP is dropping like a stone. We can see through their omissions of truth. Full year value now for me for DIL is $2.97, even with 25% growth. Real value (decent EPS, if they were paying dividends, not looking at future growth) is around $1.70. Unless something changes the $2.97 is where I expect the SP to head to.

If you are long on DIL, it should be fine, because their fundamentals will probably change at some point. But until management shows some spending restraint, shows some balls and actually does something with the cash, or shows its hand with a new product, don't expect any positives in the SP. And brokers recommendations of "buy/accumulate" with their target prices of $5.80 are complete and utter tosh. This is exactly why you should DYOR, brokers are saying this so that mugs will prop the SP up either at current levels or send the SP higher so they can offload all their shares they bought at $5+ for not much of a loss. They are hurting at the moment and when they are hurting they try to convince people the shares are worth more than their current price so they can sell their private clients shares (where they make their money). Its the most dishonest thing in the whole business.

If you are staying in DIL, hope like hell there is an announcement that will change their fundamentals in the near future. Because if this doesn't happen, my belief is the SP will head towards $3, around about its current, forward looking, fundamental value. Myself, I am almost all out now for a small profit (average buy price ~$4). My remaining shares (10% of what I had) cover my hope that there will be a change in their fundamentals. Remember that DIL is NOT suffering from the current market tech downtrend, it is suffering from a lack of growth and a blow out in OpExp.

[nextbigthing]

Excellent post Blobbles. Thanks

[Joshuatree]

Yes thanks from me too. Im not savvy re doing forensics and drilling down through their figs and spin but your plain english is great.Of course any rebuttal int too .Still on my watch list ;cheersJT

[Carpenterjoe]

Remember that Sparky had stated this when growth was around 65% and OpExp hadn't blown out. Forward looking, I had a similar valuation.

However now we have a 25% growth rate, maybe (yet claims the market is not saturated meaning it should still be around 60-80% especially with the new European market entry), management claiming they are keeping cash for growth (same story for 2 1/2 years, but no action), OpExp growing around 100% a year even AFTER the restatement, no movement on the NASDAQ listing (same story for another 2 years) while management is rewarding themselves with fatter and fatter pay checks and bigger/nicer offices. Margins are shrinking much more than they should be [EDIT: Margins aren't GROWING as much as they should be, sorry!]. Just for comparison 2 years ago we had EPS of 6c, likely this year they will be 11-12c. Over the same time revenues have more than doubled. For a cloud computing firm, there earnings should be much higher than their revenue growth as the cost of doing business should be on a diminishing scale. For every new customer they get, they should be spending less per customer. But they aren't, they are increasing their OpExp at the same rate as their revenue if not more.

They keep trumpeting their graph (page 7 of the Investor Presentation) which shows their revenue growth vs the cost of doing business and their increasing margin. What they fail to include in that graph is the growth in their OpExp. Conveniently leaving this out does not fool shareholders when they see the numbers further down the report. And that is why the SP is dropping like a stone. We can see through their omissions of truth. Full year value now for me for DIL is $2.97, even with 25% growth. Real value (decent EPS, if they were paying dividends, not looking at future growth) is around $1.70. Unless something changes the $2.97 is where I expect the SP to head to.

If you are long on DIL, it should be fine, because their fundamentals will probably change at some point. But until management shows some spending restraint, shows some balls and actually does something with the cash, or shows its hand with a new product, don't expect any positives in the SP. And brokers recommendations of "buy/accumulate" with their target prices of $5.80 are complete and utter tosh. This is exactly why you should DYOR, brokers are saying this so that mugs will prop the SP up either at current levels or send the SP higher so they can offload all their shares they bought at $5+ for not much of a loss. They are hurting at the moment and when they are hurting they try to convince people the shares are worth more than their current price so they can sell their private clients shares (where they make their money). Its the most dishonest thing in the whole business.

If you are staying in DIL, hope like hell there is an announcement that will change their fundamentals in the near future. Because if this doesn't happen, my belief is the SP will head towards $3, around about its current, forward looking, fundamental value. Myself, I am almost all out now for a small profit (average buy price ~$4). My remaining shares (10% of what I had) cover my hope that there will be a change in their fundamentals. Remember that DIL is NOT suffering from the current market tech downtrend, it is suffering from a lack of growth and a blow out in OpExp.

So you value this company at 240-360mil?

They have 70million in cash (US dollars)
and will be profiting 20 million a year!

I would love to buy a business off you any day of the week!

[blackcap]

So you value this company at 240-360mil?

They have 70million in cash (US dollars)
and will be profiting 20 million a year!

I would love to buy a business off you any day of the week!

Hi Carpenterjoe, I will have to disagree with you here... my reasons are as follows: Lets say we take a mid valuation of $300m. Take out the cash of $70m as it is irrelevant for valuation purposes. (if you need cash for growth you can always do an equity raising) That makes the value of the business $230m. Would you pay $230,000 for a business making $20,000 profit per annum? I would not.

[Whipmoney]

Hi Carpenterjoe, I will have to disagree with you here... my reasons are as follows: Lets say we take a mid valuation of $300m. Take out the cash of $70m as it is irrelevant for valuation purposes. (if you need cash for growth you can always do an equity raising) That makes the value of the business $230m. Would you pay $230,000 for a business making $20,000 profit per annum? I would not.

Are you actually serious? You wouldn't pay $230m for a business generating $20m NPAT?! Thats an 8.6% net return on equity before even taking into consideration the prospect of NPAT growth and the massive ability to lever up the balance sheet to make even greater returns.

That is a P/E fund managers f**king dream and if you don't consider that a good deal then you probably should be in the investing game...

[GizyGold]

Agree Whipmoney, its not just any business, the relationships they form with its clients are 1st class and has a big future ahead. I am thinking Blackcap was getting confused with an inferior rental property worth 230k in an inferior locality with a 20k gross rent per year. I can see this situation here turning out just like Mobile Embrace where some switched on funds will be slowly accumulating for the next 12 months. until there is a catalyst for the share price to spike. Not to worried about the company hovering around mid 3 to mid 4, mayby they might do something when the bank balance gets to 100million a nice round figure.

[blackcap]

Are you actually serious? You wouldn't pay $230m for a business generating $20m NPAT?! Thats an 8.6% net return on equity before even taking into consideration the prospect of NPAT growth and the massive ability to lever up the balance sheet to make even greater returns.

That is a P/E fund managers f**king dream and if you don't consider that a good deal then you probably should be in the investing game...

I never said it was NPAT. We could also be talking about EBITDA. Makes a big difference. Also I said I would not pay $230,000 for a business generating $20,000. That too is different.

[GizyGold]

[QUOTE=moosie_900;488949]Gizy, MBE is growing at 60%+ per annum in a rapidly expanding sector with potentially unlimited growth. DIL is on 20% and declining. It's consolidation time around a PEof 20 for DIL (fully diluted of course).

yeah for sure totally different but I reckon the next 6 months there could be pressure on share price like MBE with someone silently accumulating. Its seems MGMTs target is to do everything to fuel growth so if they havnt delivered in next 12 months I might lose my patience but I reckon they will come through with something on the horizon.

[Carpenterjoe]

Hi Carpenterjoe, I will have to disagree with you here... my reasons are as follows: Lets say we take a mid valuation of $300m. Take out the cash of $70m as it is irrelevant for valuation purposes. (if you need cash for growth you can always do an equity raising) That makes the value of the business $230m. Would you pay $230,000 for a business making $20,000 profit per annum? I would not.


And that's the difference, I would happily take a 230,000-460,000 loan and pay it down over say ten-twenty years and have a company that didn't cost me anything! By year xyz the exchange rate I think will swing in Diligent's favour and by xyz year I expect this companies profits to be 2x 3x what they are now, and that would result in nice profit. I'm not looking for a 1000% return in year.

Slow and steady.:t_up:

[Baddarcy]

Its good to see so many comments on valuations, personally what i like is hearing opinions that are different from mine and then understanding why someone has them. Usually the "right" answer is somewhere in the middle.

Personally im not concerned about the growth, im not a big fan of percentages, just straight dollars for me thanks. Yes the percentage is shrinking but the dollar value is reasonably linear, which im good with.

What i am a concerned about is the increase in "General and administrative" expenses from $USD3.6m in the March 2013 quarter to $USD 6.8m in the March 2014 quarter. They have mentioned that the 6.8m included $1.2 for restatement/ Sodi's options expenses, so the recurring figure is closer to $5.4m.

But there has not been any commentary from DIL on how in 12 months the General and Admin expenses have increased by $1.8m per quarter in just 12 months.

Because of the lack of info i am guessing that the increase in cost is at least partially (hopefully mostly) the cost of the new German data centre based on the following comments from the Jan Quarterly.

"management has decided to accelerate its plans to expand more widely across Europe by establishing operations and a data center in Germany." and "Diligent currently has data centers in the United States and Canada. The Company estimates that it will spend over $2 million building out the European data center."

It is my belief that the downward pressure on the share price is being caused by the unexplained increase on expenses rather than anything to do with growth.

[Carpenterjoe]

Its good to see so many comments on valuations, personally what i like is hearing opinions that are different from mine and then understanding why someone has them. Usually the "right" answer is somewhere in the middle.

Personally im not concerned about the growth, im not a big fan of percentages, just straight dollars for me thanks. Yes the percentage is shrinking but the dollar value is reasonably linear, which im good with.

What i am a concerned about is the increase in "General and administrative" expenses from $USD3.6m in the March 2013 quarter to $USD 6.8m in the March 2014 quarter. They have mentioned that the 6.8m included $1.2 for restatement/ Sodi's options expenses, so the recurring figure is closer to $5.4m.

But there has not been any commentary from DIL on how in 12 months the General and Admin expenses have increased by $1.8m per quarter in just 12 months.

Because of the lack of info i am guessing that the increase in cost is at least partially (hopefully mostly) the cost of the new German data centre based on the following comments from the Jan Quarterly.

"management has decided to accelerate its plans to expand more widely across Europe by establishing operations and a data center in Germany." and "Diligent currently has data centers in the United States and Canada. The Company estimates that it will spend over $2 million building out the European data center."

It is my belief that the downward pressure on the share price is being caused by the unexplained increase on expenses rather than anything to do with growth.


Wait to they stop growing, then ask for cost cutting and penny pinching.

Its difficult to grow a business and be completely efficient in terms of costs.

But I see the possibility of future efficiency improvements as positive.

[winner69]

With all the expenses growing as they grow and the crocodile jaws getting smaller on the chart I sometimes wonder that DIL are more of services company rather than a true SaaS onel

[Fisherking]

Its good to see so many comments on valuations, personally what i like is hearing opinions that are different from mine and then understanding why someone has them. Usually the "right" answer is somewhere in the middle.

Personally im not concerned about the growth, im not a big fan of percentages, just straight dollars for me thanks. Yes the percentage is shrinking but the dollar value is reasonably linear, which im good with.

What i am a concerned about is the increase in "General and administrative" expenses from $USD3.6m in the March 2013 quarter to $USD 6.8m in the March 2014 quarter. They have mentioned that the 6.8m included $1.2 for restatement/ Sodi's options expenses, so the recurring figure is closer to $5.4m.

But there has not been any commentary from DIL on how in 12 months the General and Admin expenses have increased by $1.8m per quarter in just 12 months.

Because of the lack of info i am guessing that the increase in cost is at least partially (hopefully mostly) the cost of the new German data centre based on the following comments from the Jan Quarterly.

"management has decided to accelerate its plans to expand more widely across Europe by establishing operations and a data center in Germany." and "Diligent currently has data centers in the United States and Canada. The Company estimates that it will spend over $2 million building out the European data center."

It is my belief that the downward pressure on the share price is being caused by the unexplained increase on expenses rather than anything to do with growth.

Great post.

I agree the admin expenses are getting out of hand. Also agree it is poor that we have heard nothing from DIL regarding why these expenses have got to where they are given we're seeing smaller growth; however I think its worse that as shareholders we haven't posed this question when we've so recently had the chance. I put myself in this basket; I couldn't even be bothered turning up to the meeting.

Also think carpenterjoe has a good point when he somewhat optimistically states the money is being spent on future growth opportunities in Europe.

I think we need to be much smarter on the rare occasions opportunities like meetings present themselves.

[kizame]

Don't beat yourselves up:
I think in my personal view is to get out of this company,wait for the shareprice to settle,then if you still like what the company is doing,get back in.
I note that there has been lot of soulsearching and over analysing since the shareprice has left the lofty heights of $8 behind.
It's not like you have the excuse of a dividend to fall back on.
Some will say "but the company is such great value and has a mountain of cash and very profitable"
BUT the shareprice continues to fall,and that IS the point! After all as investors or traders,we all rely on a shareprice that rises to make money, so...

[winner69]

Do you guys actually read the SEC filings that are filed quarterly and are very detailed. From the moans maybe not

Heaps of detail on all the expenses and comparison to pcp.

Like Q1 say sales costs down because sales commissions were down (slack sales force maybe) and that in the R&D there is 13 extra people compared to last year (mostly in NZ)

Here's the Q1 one filed the other day

http://diligentboard.ir.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingCONVPDF1?SessionID=8FyE6dT iEdIqB6S&ID=10058678

[Carpenterjoe]

After all the failed breakout attempts...if DIL drops below the 4 bucks support it won't be a good look ..eh?...To some it will be a good look as there is always a buyer somewhere in the Marketplace.

http://i458.photobucket.com/albums/qq306/Hoop_1/DIL26062014.png (http://s458.photobucket.com/user/Hoop_1/media/DIL26062014.png.html)

So Sir hoop, where to now? the support of $4 broken?

[Snow Leopard]

Do you guys actually read the SEC filings that are filed quarterly and are very detailed. From the moans maybe not

Heaps of detail on all the expenses and comparison to pcp.

Like Q1 say sales costs down because sales commissions were down (slack sales force maybe) and that in the R&D there is 13 extra people compared to last year (mostly in NZ)

Here's the Q1 one filed the other day

http://diligentboard.ir.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingCONVPDF1?SessionID=8FyE6dT iEdIqB6S&ID=10058678

That is a better formatted version of the 10-Q (https://nzx.com/files/attachments/195669.pdf) which was attached to the First Quarter 2014 Results Announcement (https://nzx.com/companies/DIL/announcements/251804) to the NZX so they must have read it.

Best Wishes
Paper Tiger

[winner69]

So Sir hoop, where to now? the support of $4 broken?

No worries carpentersmate, it will be above 4 bucks next week and hang around 400 and 430 fipor the rest if the year.

Still unloved and unwanted, no sexy stock this one

[ddrone]

Depth on the buy side is looking extremely thin this morning. Bets on a bottom? Could be good trading.

[bull....]

back under 3 in due course like i say earlier was expensive at between 4 - 5 dollars

[Baddarcy]

Its good to see so many comments on valuations, personally what i like is hearing opinions that are different from mine and then understanding why someone has them. Usually the "right" answer is somewhere in the middle.

Personally im not concerned about the growth, im not a big fan of percentages, just straight dollars for me thanks. Yes the percentage is shrinking but the dollar value is reasonably linear, which im good with.

What i am a concerned about is the increase in "General and administrative" expenses from $USD3.6m in the March 2013 quarter to $USD 6.8m in the March 2014 quarter. They have mentioned that the 6.8m included $1.2 for restatement/ Sodi's options expenses, so the recurring figure is closer to $5.4m.

But there has not been any commentary from DIL on how in 12 months the General and Admin expenses have increased by $1.8m per quarter in just 12 months.

Because of the lack of info i am guessing that the increase in cost is at least partially (hopefully mostly) the cost of the new German data centre based on the following comments from the Jan Quarterly.

"management has decided to accelerate its plans to expand more widely across Europe by establishing operations and a data center in Germany." and "Diligent currently has data centers in the United States and Canada. The Company estimates that it will spend over $2 million building out the European data center."

It is my belief that the downward pressure on the share price is being caused by the unexplained increase on expenses rather than anything to do with growth.

Finally found it :-)

The increase in general and administrative expenses of $3.1 million is comprised of an increase of $3.1 million in the U.S., an increase
of $0.1 million in the U.K. and a decrease of $0.1 million in New Zealand. The U.S. increase consists of $0.3 million relating to
salaries, $0.4 million relating to share based compensation and $1.0 million relating to the performance fixed cash award for the CEO
(see See Liquidity and Capital Resources). Other increases include occupancy cost of $0.3 million; Directors’ fees and expenses of
$0.1 million due to the increase in our Board of Directors compensation; professional fees of $0.6 million relating to costs associated
with an Enterprise Resource Planning (ERP) implementation and other consultant matters; $0.2 million for accounting and auditing
fees and $0.2 million for legal fees.

[winner69]

Growth????

Q1 and DIL guidance has 4 quarters revenues of $20m-$22m for 2014

Good numbers but growth in line with punters expectations?

That's what driving the shareprice at the moment (or how I see it anyway)

[Whipmoney]

Finally found it :-)

The increase in general and administrative expenses of $3.1 million is comprised of an increase of $3.1 million in the U.S., an increase
of $0.1 million in the U.K. and a decrease of $0.1 million in New Zealand. The U.S. increase consists of $0.3 million relating to
salaries, $0.4 million relating to share based compensation and $1.0 million relating to the performance fixed cash award for the CEO
(see See Liquidity and Capital Resources). Other increases include occupancy cost of $0.3 million; Directors’ fees and expenses of
$0.1 million due to the increase in our Board of Directors compensation; professional fees of $0.6 million relating to costs associated
with an Enterprise Resource Planning (ERP) implementation and other consultant matters; $0.2 million for accounting and auditing
fees and $0.2 million for legal fees.


The CEO's Fixed Cash Award is the one cost that bothers me, particularly given the SP performance over the last 12 months.

I need to re-read his revised contract however from my initial impression it seemed substantially less genereous than what he received in the previous year.

[JohnnyTheHorse]

Growth????

Q1 and DIL guidance has 4 quarters revenues of $20m-$22m for 2014

Good numbers but growth in line with punters expectations?

That's what driving the shareprice at the moment (or how I see it anyway)

You've hit the nail on the head there. The quarter on quarter revenue growth is starting to get very small which is a concern. Based on this I currently struggle to justify a price over $4. In saying that, DIL does have the money to increase that growth significantly by expanding into new areas. The market needs to see evidence of this first before it can justify pricing DIL on larger multiples. It does puzzle me why DIL are yet to spend any on their cash pile on growth, even though they keep mentioning it. Maybe they are stock piling it to acquire a smaller player?

Maybe the market will find fair value at $3.33... wouldn't that be spooky eh winner?

[blobbles]

Doesn't take a rocket scientist to see where the current trend of continuing lowering growth (and dramatically increasing OpExp) is taking them...

5961

[blobbles]

And people think I'm bearish and "annoying"!

I think being bearish on growth stocks at the moment is pretty smart. Market sentiment seems has headed towards dividend stocks and slow growing good returns. Makes sense to me as interest rates go up.

Here's hoping for a growth turn around at the end of this year/beginning of next! Hopefully if Europe takes off, or they do something with their money finally, we might see some action. Otherwise the current trend is reduced growth, bigger paychecks for management (somehow those too are congruous?), more R&D which appears to be to make tiny incremental improvements instead of the fabled "new product" and nicer offices/cars/junkets/whatever.

[Baddarcy]

In saying that, DIL does have the money to increase that growth significantly by expanding into new areas. The market needs to see evidence of this first before it can justify pricing DIL on larger multiples. It does puzzle me why DIL are yet to spend any on their cash pile on growth, even though they keep mentioning it. Maybe they are stock piling it to acquire a smaller player?

My bet has to be a purchase, they are currently sending less then $2m per quarter on development but are stockpiling between $5m and $8m per quarter. They don't need the cash pile for new development they can fund it out of cash flow.

[Whipmoney]

It does puzzle me why DIL are yet to spend any on their cash pile on growth, even though they keep mentioning it. Maybe they are stock piling it to acquire a smaller player?

They are actually spending money on growth, this was evidenced by the launch of their Windows 8.1 platform which was a whole new build from the ground up (300k-400k of unique lines of code) that are completely unique of their iOS platform.

They have also undertaken significant investment on their back-end system which is actually the grunt of their SaaS platform and which interacts with their front-end iOS and Win8.1 platforms.

As Baddarcy mentioned earlier this is entirely funded out of their significant level of free cash-flow.

As far as their stockpiling goes it is foreseeable that it wouldn't take US$60m to develop another product (which is unlikely at this stage) so I can only assume that they are stockpiling for an acquisition.

[Roadrunner]

They are actually spending money on growth, this was evidenced by the launch of their Windows 8.1 platform which was a whole new build from the ground up (300k-400k of unique lines of code) that are completely unique of their iOS platform.

They have also undertaken significant investment on their back-end system which is actually the grunt of their SaaS platform and which interacts with their front-end iOS and Win8.1 platforms.

As Baddarcy mentioned earlier this is entirely funded out of their significant level of free cash-flow.

As far as their stockpiling goes it is foreseeable that it wouldn't take US$60m to develop another product (which is unlikely at this stage) so I can only assume that they are stockpiling for an acquisition.


With regard to Whipmoneys post I was really impressed with DILs Chief Technology Officer Michael Flickman`s presentation.As touched on this was a highly complex app and I quote"not something that can be knocked up in a weekend"I can see no reason why this won`t make a significant impact on revenues going forward,bearing in mind that staffing has been significantly increased by about 40% since last July and the Euro data centre is up and running with possibly more in the pipeline.
For nearly a week now since the agm I believe DIL shares have been carefully manipulated down.I think Moosie and others mentioned the cap and accumulate phrase.Someone has been building/adding to a stake,putting up a cap number to make the SP look weaker than it really is and then picking up some cheapies.How long this will go on for I don`t know but when the brakes finally come off it will be interesting.
I`m convinced DIL will make an acquisition but as always DIL wont be rushed into anything,frustrating as that is lol.As Whipmoney said they have plenty of dosh for R&D and don`t require heaps of money to push their growth plans.They may look a bit sad and unloved at the moment but putting the lack of news re new products,NASDAQ or acquisitions to one side I see no reason why the growth cannot rocket in europe alone.No1 product with v.happy customers,a top ISO rating and the restatement rubbish over........who wouldnt want to be onboard for the longer term???

I had a go on the Boardbook for the first time after a demo at the agm.I have to say as a non-tech savvy person it was just like it says on the box.Within 5 minutes I had the hang of it.Brilliantly simple to use and navigate and so intuative....very impressive:)

[Xerof]

Very interesting pattern over the past few days of steadily declining price all day long then BAM! About 3.30 someone puts the price back up a bit.

Also pays to look at it the other way from time to time moosie - if you are distributing, buy a few back near EOD, to prop the price for better opening prices the next day.

smoke and mirrors

[fiasco]

Agree, low volume through the day, but come near the end of day trading, bam.

Also it is getting somewhat frustrating at the moment reading comments about growth. Perhaps I am missing something, and everyone is talking about current state and the short term.

Looking forward, growth is still an option? They only have 7% of the market, and haven't even started in Europe which is equal size (data centre is now up), nor the Healthcare industry in the US .

"The company has identified that while it is the market leader in a relatively untapped market, it has only penetrated less than 7% of the total addressable market opportunity"

I may perhaps be incorrect here, but after a very distracting year, the executive team have been impressive to say the least.

[Whipmoney]

Agree, low volume through the day, but come near the end of day trading, bam.

Also it is getting somewhat frustrating at the moment reading comments about growth. Perhaps I am missing something, and everyone is talking about current state and the short term.

Looking forward, growth is still an option? They only have 7% of the market, and haven't even started in Europe which is equal size (data centre is now up), nor the Healthcare industry in the US .

"The company has identified that while it is the market leader in a relatively untapped market, it has only penetrated less than 7% of the total addressable market opportunity"

I may perhaps be incorrect here, but after a very distracting year, the executive team have been impressive to say the least.

To answer your question I believe that many would be constrasting this company to other companies in the SaaS space (e.g. Xero, Marketo, Salesforce) etc and therefore tend to focus on comparing short-sighted heuritistics such as growth rates, retention rates and eps/PE ratios to industry norms/leaders.

While all of the above are important they fail to reflect that this company long ago transitioned to a profitable state. Sure growth rates are sub-normal for the SaaS section but they are well above "normal" growth rates of a mature company. As such the company is still growing at a very healthy rate (in comparison to all companies) but its growth metrics are somewhat poor compared to tech growth / SaaS growth comparables.

DIL's model is highly scalable (with cash being recieved up-front) so in essence it can sustain quite high levels of growth without injecting tremendous levels of stress into the business. That being said, the company is taken steps to prevent this by scaling up their support teams, improving internal systems (both back-end and ERP) and increasing internal controls (particularly around the accounting side).

Taking all of these into account the company is well poised for future growth (actually better than they have ever been) however its yet to be seen if the growth levels of previous years (200+ accounts per quarter) are feasible. Obviously the market is under-penetrated by many of the early adopters (low hanging fruits) would have been onboarded and it will take some time for other industries (or "verticals") to adopt this technology (particularly the health-sector which is generally slow to progress).

In terms of their transition from a super-normal growing SaaS company to a strong growth cash-flow company I think this has created an interesting threshold point which has actually created a great value play for investors looking to get in for the long-game. I still think this stock's instrinsic value is well above $4.50 to $5 and that the cash on hand creates plently of opportunities to add/extract value.

[Monty]

Another quarter has now completed so I suppose in a couple of weeks we might see the quarterly update. I would love to Diligent to go back to the old format. with graphs and comparisons. Maybe we might see a little traction starting to occur in Europe. but in the meantime the big pool of money will grow.

at $385 it is getting tempting to maybe pick up a few more.

[Tony Two Gloves]

Well they are half right!

[winner69]

No worries carpentersmate, it will be above 4 bucks next week and hang around 400 and 430 for the rest if the year.

Still unloved and unwanted, no sexy stock this one

Over 400 again ....maybe 430 pessimistic ....lets say 500 by end of July

Things on a roll now

[Whipmoney]

Over 400 again ....maybe 430 pessimistic ....lets say 500 by end of July

Things on a roll now

Manic-Depressive as always.

[couta1]

$3.50 near term, lower medium term...
Hey Moosie are you going to bet one of your antlers on this prediction?:cool:

[Hoop]

moosie can't be to confident about the short term $3.50 call then even lower medium term cause he would not take my side bet of $5 by year end.
as winner has said currently unloved and out of favor........usually means time to buy.

Hasn't passed my Sharetrader indicator yet....need to be higher than 5days per thread page ;)

[zigzag]

Do I need to post the chart up yet again???

Moosie. The wind has changed. You need to stick your head out the window now and again, or is it too cold down there.

[winner69]

Manic-Depressive as always.

No need to get personal whip .... might take offence

This dramatic shift in mood came on when I bought some DIL the other day ..... and now of I course I want it to go to $5 (just a nice round target)

DIL not going to plan for you is it .... must be frustrating as hell and testing your patience so I can understand why you got personal. I'll forgive you this time

[Whipmoney]

No need to get personal whip .... might take offence

This dramatic shift in mood came on when I bought some DIL the other day ..... and now of I course I want it to go to $5 (just a nice round target)

DIL not going to plan for you is it .... must be frustrating as hell and testing your patience so I can understand why you got personal. I'll forgive you this time

Haha I was alluding to the market (and not yourself). I think my post was inspired from a quote from Elon Musk on the eratic nature of share markets.

[fiasco]

Pray, do tell how it has changed? The restatement is over and instos aren't buying like predicted, no new product, slowing growth, margins contracting and fatter paycheques for those who screwed up. Seems like back to normal (or worse!) To me.

Whilst I always appreciate your opinion. There are some positives:

- Salary packages are not ballooning like you say i.e. Sodi is taking less than historically
- Growth is still a key area of interest as Whipmoney has credibly indicated a few posts above (Europe, low margin of market penetration)
- New product is still suspected to be on the horizon, when is anyone's guess, but it does sound as if something is in the works given their inability to disclose anything due to risking competitor advantage.

[Whipmoney]

Yes the company has hit some rough water but the share price is also 50% off the highs.
Ship only needs to be steadied to make the current share price look cheap.

To be fair, the SP being 50% of previous highs means nothing.

What matters is whether it is under-valued and with an FCFF of now $23m USD (and growing) + USD$60m cash on hand I still believe it is. Relative to the market cap of $324m of course.

[Whipmoney]

Whilst I always appreciate your opinion. There are some positives:

- Salary packages are not ballooning like you say i.e. Sodi is taking less than historically
- Growth is still a key area of interest as Whipmoney has credibility indicated a few posts above (Europe, low margin of market penetration)
- New product is still suspected to be on the horizon, when is anyone's guess, but it does sound as if something is in the works given their inability to disclose anything due to risking competitor advantage.

New product has been and gone (in the form of a Win 8.1 platform). Windows has and is gaining a reasonable level of market share in the enterprise space which is where DIL operates in.

They're also moving towards a fully integrated OS (much like iOS) which will mean that their phones, surface tabs and desktops will all have the same OS base coding allowing for greater interchangability between Windows devices (thereby making DIL's job significantly easier).

Is another product in the mix? I suspect not, their CTO indicated that it is unlikely that they will build again for the Android platform as it is the wild west and very few corporates would use it.

At this stage I still don't see what all the fuss is about. Its like not anyone is expecting Xero to launch an email client or a CRM system.

DIL should stick to their guns, make sure they have all the right bases covered in terms of viable platforms (which they do) and keep abreast of technological innovation (which they are).

Hopefully any further R&D is aimed at furthering the penetration of their existing product into their clients organisations, i.e. finding more users at the mangerial and admin levels.

[Whipmoney]

Harbour believes ya Whip ;)

Lol does that mean you're eating your words about instititutions not getting back in?

[blobbles]

They're also moving towards a fully integrated OS (much like iOS) which will mean that their phones, surface tabs and desktops will all have the same OS base coding allowing for greater interchangability between Windows devices (thereby making DIL's job significantly easier).



What on earth does this mean? They are creating their own OS for their product? You can't be serious...

And where did you get that information from?

[zigzag]

If another one jumps in, yes.

How about Wasatch?

[zigzag]

Pray, do tell how it has changed? The restatement is over and instos aren't buying like predicted, no new product, slowing growth, margins contracting and fatter paycheques for those who screwed up. Seems like back to normal (or worse!) To me.

Moosie. I think you should shout Roadrunner a coffee and a Big Breakfast, and perhaps he will give you a "heads-up" on what's going on.

[Whipmoney]

What on earth does this mean? They are creating their own OS for their product? You can't be serious...

And where did you get that information from?

Microsoft are working towards creating a fully integrated OS in their Windows 9 (or possibly 10) build. What this means is that much like apple, the iOS code is the roughly the same for all devices so they can integrate a lot easier (much like iPhones, iPads and iMacs do).

Currently with Windows 8.1 the coding is quite different for smartphones/surface tabs compared to desktops meaning that Apps like Boardbooks are quite as portable.

[blobbles]

Microsoft are working towards creating a fully integrated OS in their Windows 9 (or possibly 10) build. What this means is that much like apple, the iOS code is the roughly the same for all devices so they can integrate a lot easier (much like iPhones, iPads and iMacs do).

Currently with Windows 8.1 the coding is quite different for smartphones/surface tabs compared to desktops meaning that Apps like Boardbooks are quite as portable.

Right, I got you, you were talking about Microsoft, not DIL! The confusion was in the "They're" which I assumed you meant DIL.

[Roadrunner]

As long as he brings zee Porsche :)

Haha!Porsche is long gone and back to the trusty classic Saab turbo........have bought shares in a racehorse though.Not content with the thrills and spills of the stockmarket I`ve found another way to fritter away my retirement nest-egg lol

[Baddarcy]

Milfords Active Growth Fund Holdings (as at 30 June 2014).....no sign of any DIL


Fletcher Building 5.0% Restaurant Brands 1.5% Slater & Gordon 1.1%
Fisher & Paykel Healthcare 4.0% Tourism Holdings 1.5% Corporate Travel Management 1.1%
The A2 Milk Company 2.7% Delegats Group 1.5% Flight Centre 1.1%
Kathmandu Holdings 2.4% Auckland International Airport 1.4% Cardno 0.9%
Wynyard Group 2.3% Orion 1.2% National Storage 0.9%
Air New Zealand 2.2% Xero 1.1%
Summerset Group 2.0% Contact Energy 0.9%
NZX 2.0% Skellerup 0.9%
Other NZ & Australian Holdings 20.6%
Genesis Energy 2.0% NZ Refining 0.8% Bonds 5.5%
EBOS Group 1.9% Meridian Energy 0.8% Global Equities 9.1%
Complectus(NZ Guardian Trust) 1.8% Mainfreight 0.7% Other Unlisted Companies^ 2.0%
Steel & Tube 1.6% Cash 15.5%

[psychic]

20% of the fund is in "other". Could well include DIL

edit: Max they could have in DIL under "Active Growth fund" $1.73m
(holdings under 0.7% of fund lumped together under "other")

[Baddarcy]

Quarterly due tomorrow...presumably

Not expecting anything of note, I am hopeful that quarterly revenue will crack the $USD20m mark, but given the range they advised only a few weeks ago, i think it will be a long shot. Also given the AGM and the end of the restatement process was in the last month i can't see us getting any news of note.

This is the last quarterly that will include any of the restatement garbage, so as Steve Hansen would say, lets flush the dunny and move on.

Anyone else feel any different?

[winner69]

Quarterly due tomorrow...presumably

Not expecting anything of note, I am hopeful that quarterly revenue will crack the $USD20m mark, but given the range they advised only a few weeks ago, i think it will be a long shot. Also given the AGM and the end of the restatement process was in the last month i can't see us getting any news of note.

This is the last quarterly that will include any of the restatement garbage, so as Steve Hansen would say, lets flush the dunny and move on.

Anyone else feel any different?

Maybe they will surprise on the upside and report $20.1m

After all they said - Second Quarter 2014: The Company expects revenue to be between $US 19.7 million and $US 20.0 million, or an increase of 26% to 28% year-over-year.

But nearly 30% up on a year ago is FANTASTIC

But wouldn't be much more than Q1 would it .....but jeez once again I or get all about that deferred revenue.

Like you if serious about seeing this as a growth company one hopes for $25m eh

[Whipmoney]

I hope for all shareholders that there is an upside surprise.

Honestly, in this market I would take DIL over every other tech/growth stock right now. Solid cash flows and cash pile is a nice defensive play when loss making entities are suffering.

Never thought I'd say that eh?

*watches everyone rush to sell now...*

The curious case of the mature moose.

Nah to be fair I think you're right. This stock held up quite well considering the tech crunch we saw and despite the decling quarterly growth percentage points, she continues to generate lovely piles of cash which buys both opportunities and options for the future.

Hopefully a decent customer acquisition figure tomorrow but regardless I'm holding long.

[Baddarcy]

So where is my Quarterly Report DIL?

I know i said i was not expecting anything of note...but that didn't mean i wasn't expecting anything at all !! ;-)

[winner69]

So where is my Quarterly Report DIL?

I know i said i was not expecting anything of note...but that didn't mean i wasn't expecting anything at all !! ;-)

Was it due today?

Getting desperate are we

[Baddarcy]

Was it due today?

Getting desperate are we

They usually release on the 2nd Tuesday after Quarter end. Not desperate, just impatient ;-)

[couta1]

Haha good old Saab eh? Question now I guess is who will get their Porsche first? Hope you didn't name the horse Couta :p Dont knock an old horse called Couta this horse had his day running 31mins for 10k and a 2hr24min marathon he just hasnt hit his form on the market yet:cool:

[winner69]

They usually release on the 2nd Tuesday after Quarter end. Not desperate, just impatient ;-)

Not today either by looks of it

At least Moosie hasn't put the Yellen kiss of death on DIL

Must rate it as a solid earning undervalued company

[Whipmoney]

What's the latest we should expect the quarterly's to come through by? The end of this week?

[blobbles]

The bull in me says they are waiting to announce the quarterly so they can release it at the same time as other good news.

The bear says they are looking at the numbers and going "oh ****!", figuring out some weasel words to explain them.

[winner69]

What's the latest we should expect the quarterly's to come through by? The end of this week?

They have 40 (in some cases 45) days to file their 10-Q

So suppose could keep us waiting to early August

Remember the old saying past performance is no indication of future performance

[winner69]

Hope it not going to be one of those 5pm Friday afternoon announcements

[Baddarcy]

Today then?.....

[Whipmoney]

Today then?.....

Hope so.. my interminable patience is now beginning to get tested.

[zigzag]

Perhaps the old format quarterly that we are waiting for is now a thing of the past, and henceforth they will confine themselves to the regulatory filings only. The latest will be the half-year as well. Maybe also double checking everything. No more stuff-ups.

[winner69]

They have until early August to file their 10-Q

Two more Tuesdays away

Patience - the pile of cash is still growing (hope so)

[Whipmoney]

Perhaps the old format quarterly that we are waiting for is now a thing of the past, and henceforth they will confine themselves to the regulatory filings only. The latest will be the half-year as well. Maybe also double checking everything. No more stuff-ups.

Actually I think it will be more in regard to getting their SEC filings 100% in check as that is where the issue was first identified and they would need to remain a "current filer" for at least 12 months prior to being eligble for a Nasdaq listing.

[Monty]

Sorry Whipmoney can you please explain a little clearer for this novice investor. Are you saying Diligent need to have 12 months of clear clean 100% accurate reports before the company can apply to the NASDAQ for a listing?

And are Diligent under no particular obligation to release a quarterly report?

[Whipmoney]

Sorry Whipmoney can you please explain a little clearer for this novice investor. Are you saying Diligent need to have 12 months of clear clean 100% accurate reports before the company can apply to the NASDAQ for a listing?

And are Diligent under no particular obligation to release a quarterly report?

Given that they are US domiciled, DIL are required by law to file an Annual (10K) and Quarterly (10Q) accounts with the SEC in America.

In terms of their NZX requirements I don't believe that they are required to provide quarterly accounts/updates as a rule however given that they are required to file in the US this translates to a requirement to file with the NZX in order to ensure that they comply with the continuous disclosure rules.

With regard to a Nasdaq listing, it was mentioned in their AGM that it would take 12 months of maintaining a "current filer" status with the SEC before they could even consider listing on the Nasdaq.

[RTM]

Thanks Whipmoney...that was informative.
Appreciated.

[winner69]

seems like a little bit of worried selling go on today

Next Tuesday maybe for an update

[psychic]

https://www.nzx.com/companies/DIL/announcements/253068

Diligent Board Member Services, Inc. ("Diligent" or the "Company") (NZX: DIL) today announced that it intends to release its financial results for the Fiscal Quarter ended June 30, 2014 on Friday, August 8, 2014 NZST (Thursday, August 7, 2014 USET). The results will be issued before 9:00 a.m. NZST (5:00 p.m. USET, Thursday, August 7).


Before 9am - encouraging..?

[winner69]

https://www.nzx.com/companies/DIL/announcements/253068

Diligent Board Member Services, Inc. ("Diligent" or the "Company") (NZX: DIL) today announced that it intends to release its financial results for the Fiscal Quarter ended June 30, 2014 on Friday, August 8, 2014 NZST (Thursday, August 7, 2014 USET). The results will be issued before 9:00 a.m. NZST (5:00 p.m. USET, Thursday, August 7).


Before 9am - encouraging..?

About the last day they could

At least not a Friday 5pm bad news event

Still finding it hard to add things up?

[Carpenterjoe]

An announcement for a announcement , these guys communicate to shareholders!

[Carpenterjoe]

It will be interesting if Fridays results show an increase in client numbers, a solid lift from last quarters 113 will indicate the importance of the new windows product.

Ill be Keeping an eye on the client to user ratio.

[Carpenterjoe]

Another unhappy staff member. Now having a crack at shareholders.



http://www.glassdoor.com.au/Reviews/Diligent-Boardbooks-Reviews-E500821.htm

[blobbles]

That last glass door review is what I have been talking about. An explosion in operating costs for sub optimal recent results. That reeks of complacency and arrogance... not a good look if you are wanting to invest in a company that has good future prospects. What sort of screw ups will the incompetents make next? And then will they pay themselves more for it again?

[BlackPeter]

Another unhappy staff member. Now having a crack at shareholders.



http://www.glassdoor.com.au/Reviews/Diligent-Boardbooks-Reviews-E500821.htm

Outch - actually the second last review reads still worse:

"The company has really changed over the last year. Moved into beautiful new offices in December, added all new great benefits in January, lots of parties and fun interaction with coworkers. It's obvious that some with the new management that the company has a renewed understanding of what is important to employees. The new HR guy is hilarious and has really added a needed spark.".

Sounds like great entertainment for staff ... but does it sound like wise use of shareholder funds?

[couta1]

Seems like they are spending that cash pile on office parties and overpaying management and staff while giving shareholders the one finger salute come on Diligent how about giving some attention to getting some value back to us longsuffering shareholders, we don't want this turning into a circus with shareholders ending up the clowns.

[KiwiGreen]

Thanks for posting that link CJ. Great way to get the inside view on a company. I have worked in a similar NZ tech company and understand how they seem to lose some ambition once the profits are creaming in and directors and managers have more money than they ever imagined. I am still wondering if there really is a revolutionary new product in the making or if all those R&D cost increases are over paid techies, and the microsoft edition is all we're going to get.

Still, much happier to be in a cashed up profitable tech stock than a speculative loss making company in the current market. Would ideally like to see it listed in the US and then bought out by a bigger US company. Or alternatively see it buy out a smaller ambitious tech company with a great product that DIL can then, by using its own great reputation and network rapidly increase the products exposure and sales.

[fiasco]

Yes, while the organisation is spending more on their employees, they're still one of Diligent's greatest assets. If you are unable to create an innovative environment to attract key talent, then you're going to fail against other organisations doing so. So there is a larger emphasis on intangible employee well-being, which I think is fine, obviously all in moderation. The difference between what we know and what internal staff know is a defined roadmap for the organisation.

[BlackPeter]

Yes, while the organisation is spending more on their employees, they're still one of Diligent's greatest assets. If you are unable to create an innovative environment to attract key talent, then you're going to fail against other organisations doing so. So there is a larger emphasis on intangible employee well-being, which I think is fine, obviously all in moderation. The difference between what we know and what internal staff know is a defined roadmap for the organisation.

Well, yes and no. I guess if they would spend share holders money on employee training and development and on defining career paths for their technical gurus (if they have any), than I think this would be a good investment. However - that's not what the reviews say. Not sure, whether I would put "beautiful new offices, all new great benefits and lots of parties and fun interaction with coworkers" into the same category. But than - I don't hold their shares anyway, so if the share holders are happy, than it must be all good :sleep:.

[Balance]

Quarterly out this week. Brace yourselves to update those spreadsheets/charts/crystal balls!

No need, Moose - someone here has already bet DIL was going down to $2.50.

Oh - he has gone quiet.

[Whipmoney]

No need, Moose - someone here has already bet DIL was going down to $2.50.

Oh - he has gone quiet.

Exactly, I still think this share has minimal/limited downside but a decent amount of potential upside as it continues to generate cash and all the options/possibilities that come with it.

It seems to be priced reasonably fairly at around the $4 mark. Sales growth may slow (as a % of total revenue) however the significant risks remain a drop in their retention rate and/or security flaws.

[Leica]

My bet is 1) if announcement is underperforming forecast, $3.80 or even $3.65 on current gittery market corrections, or 2) if better news, $4.20 to $4.25. Long term upside is Nasdaq listing. Long term downside is Sodi and cowboy attitude evidenced by restatement. Will take time for market to gain confidence as results settle. Waiting to see growing maturity in management and evidence of sales from investment in Europe.

[Whipmoney]

My bet is 1) if announcement is underperforming forecast, $3.80 or even $3.65 on current gittery market corrections, or 2) if better news, $4.20 to $4.25. Long term upside is Nasdaq listing. Long term downside is Sodi and cowboy attitude evidenced by restatement. Will take time for market to gain confidence as results settle. Waiting to see growing maturity in management and evidence of sales from investment in Europe.

I Leica,

I could be wrong however I suspect that the market has already priced in an average announcement from DIL so if we were to see numbers of 180+ new clients then there may be some decent upside.

Furthermore, its likely that the perception of this stock has already moved away (or started to move away) from it being valued as a SaaS growth stock (e.g. on SaaS metrics) to being valued as an engine for cash generation.

Just my two cents though. Can't wait until Friday.. this whole ordeal has dragged out way too long!

[Balance]

I Leica,

Furthermore, its likely that the perception of this stock has already moved away (or started to move away) from it being valued as a SaaS growth stock (e.g. on SaaS metrics) to being valued as an engine for cash generation.


Then shareholding base is in transition from 'high growth' investors selling out to those who are 'cashflow and growth' investors.

At a point in time, the transition will be completed as we saw with Sky TV.

[pierre]

"Diligent Board Member Services, Inc. ("Diligent" or the "Company") (NZX: DIL)
today announced that Mark Weldon intends to resign from the Board of Diligent
as a consequence of accepting the position of Chief Executive of Mediaworks
New Zealand. Given the nature of his new role as Chief Executive, combined
with the fact Diligent is headquartered in New York, it will not be feasible
for Mark to remain a Director of Diligent.

Mark has agreed to remain on Diligent's Board until such time that the
Company finds a replacement so that the Company can continue to meet its
requirement to have two resident New Zealand directors under the NZX Listing
Rules. Diligent is appreciative of Mark's flexibility to work through the
timing of his resignation with the Diligent Board."

So Mark's on his way to run radio stations and TV channels creating space for a director based in NZ who can add real value to DIL. Who might that new director be?

Let's have some (serious) nominations from the ST members to help the Board make their decision.

My starter for 10 - how about Rod Drury if he's not too busy to spend a day a month away from Xero.

[Harvey Specter]

So Mark's on his way to run radio stations and TV channels creating space for a director based in NZ who can add real value to DIL. Who might that new director be?

Let's have some (serious) nominations from the ST members to help the Board make their decision.

My starter for 10 - how about Rod Drury if he's not too busy to spend a day a month away from Xero.
They probably need a welled connected European director but due to the NZX, the need two kiwis. It will therefore probably just be a temporary appointment till the shift listing to the US. ;)

If it is to be a kiwi, I don't think they need a technology guy, they need a governance guy (or girl) to ensure they don't do any more stuff ups!

[Bilbo]

My starter for 10 - how about Rod Drury if he's not too busy to spend a day a month away from Xero.

No, No, No, we need Rod to stay focused on building Xero into a $50 billion company.

For an NZ based technology directory I'd put Sam Morgan forward, or even his dad. Someone that knows the value of money and will stop the squandering.

[zigzag]

No, No, No, we need Rod to stay focused on building Xero into a $50 billion company.

For an NZ based technology directory I'd put Sam Morgan forward, or even his dad. Someone that knows the value of money and will stop the squandering.

Please, not Gareth Morgan! The guys a borderline nut-cake. Someone like Herb Hunt would be a far better choice, as long as he qualifies as a New Zealander.

[zigzag]

Finally, Weldhead is gone! Bring in some fresh blood with good ideas to restart growth (and I sure as hell don't mean Handley!!!)

Moosie. You're still not getting the growth thing. I've been a shareholder for a number of years, and I really think the problems at Diligent started way before Mark Weldon. My personal view is that he was part of the solution, not part of the problem.

[KiwiGreen]

My bet is 1) if announcement is underperforming forecast, $3.80 or even $3.65 on current gittery market corrections, or 2) if better news, $4.20 to $4.25. Long term upside is Nasdaq listing. Long term downside is Sodi and cowboy attitude evidenced by restatement. Will take time for market to gain confidence as results settle. Waiting to see growing maturity in management and evidence of sales from investment in Europe.

The thing I'm most interested in is sales growth from the Windows edition. I am pretty positive they will distinguish the sales numbers between the apple and windows editions for us. Not sure if it is too soon for this to be reflected in the quarter as the sales cycle probably takes over 3 months in itself, but hopefully there is some indication of its reception being positive in the market.

The fog is slowly starting to clear again.

[winner69]

"Diligent Board Member Services, Inc. ("Diligent" or the "Company") (NZX: DIL)
today announced that Mark Weldon intends to resign from the Board of Diligent
as a consequence of accepting the position of Chief Executive of Mediaworks
New Zealand. Given the nature of his new role as Chief Executive, combined
with the fact Diligent is headquartered in New York, it will not be feasible
for Mark to remain a Director of Diligent.

Mark has agreed to remain on Diligent's Board until such time that the
Company finds a replacement so that the Company can continue to meet its
requirement to have two resident New Zealand directors under the NZX Listing
Rules. Diligent is appreciative of Mark's flexibility to work through the
timing of his resignation with the Diligent Board."

So Mark's on his way to run radio stations and TV channels creating space for a director based in NZ who can add real value to DIL. Who might that new director be?

Let's have some (serious) nominations from the ST members to help the Board make their decision.

My starter for 10 - how about Rod Drury if he's not too busy to spend a day a month away from Xero.

Dame Jenny Shipley

Global connections and an interest in mega trends

And a woman better than guys in keeping extravagant excesses under control.

[Harvey Specter]

Moosie. You're still not getting the growth thing. I've been a shareholder for a number of years, and I really think the problems at Diligent started way before Mark Weldon. My personal view is that he was part of the solution, not part of the problem.he wasn't the problem, may have been part of the soln but definitely would have helped re no fine for late filings at NZX.

I would have like to have seen a lot of NZ sign ups due to him (there may have been but not visible).

[Balance]

he wasn't the problem, may have been part of the soln but definitely would have helped re no fine for late filings at NZX.

I would have like to have seen a lot of NZ sign ups due to him (there may have been but not visible).

Glory seeking Weldon add value to DIL? Definitely by using his bruising kiwi-egg-size ego to get rid of staff at DIL - the way he did so at NZX.

[stoploss]

Dame Jenny Shipley

Global connections and an interest in mega trends

And a woman better than guys in keeping extravagant excesses under control.

Didn't see fail to keep things under control at Mainzeal ?

[Tony Two Gloves]

Bit of late positive action here today.....must be an announcement tomorrow! Expecting good things.....