TSK - TASK Group Holdings

[forest]

As you're aware, we don't know the details. From the link I posted earlier and subsequent interviews, we know the company was attempting to move to a more transaction-based (recurring and scaling nicely as they grow) - I don't think we know how far they got with this. We know that they have a separate agreement with McDonalds for each country they are working in (which continues to grow - they added 17 in 2018-19 and were operating in 58 countries at the last report, although it's not clear this is all with McDonalds). At the last half-year report, $7.8 million of the total $11.8 million revenue was recurring revenue (66%), and this grew at 59% vs overall revenue growth of 45%. So one way or another, they are increasing recurring revenue faster than the one-off setup and consulting costs.

Other things we know is the current CEO turned the company around and made it cash-flow positive where it was previously bleeding cash and reliant on raising capital. They had $13.6 million in the bank at last report when their total operating expenses for the half year was $10.5 million ($11.7 million revenue). They have stated "The Company does notintend to raise further capital to fund ongoing operations in the current financial year". Numbers of customers continues to grow very nicely as they start up in new countries with McDonalds. In the last 6 months they have brought on two new large customers.

I appreciate the argument that the McDonald's contract may not be a huge cash-cow, but I do not see the same existential threat that you seem to.

Great post mfd, I have been to 3 meetings in the last 2 years and try to understand PLX business model.
I think Balance view of this company was correct up to the time the new CEO Craig Herbison took the helm.
Also Balance was correct in my view that the McD deal was not good. However PLX was pushed in a corner financially as I understand, and there were not many options.
However in Craig Herbison the company seem to have found an answer, he created a good team around himself and better deals seem to be in the making. New features included new features for McD are often transaction based I believe.

Balance some time ago you mentioned that good money can be made when a company is turned around. Is it possible that PLX is being turned around at present? Just as MVN was but unless one follows those turn around companies closely it can be easy to miss.

[Justin]

Note 3 in the AR Financials was interesting at the time .....lead me to believe they were more a support company than anything else

In light of recent posts on here I wonder what Note 3 will look like in 2020 report

hi winner69

what do you mean note 3? Can you please explain more specifically. Thanks.

[forest]

hi winner69

what do you mean note 3? Can you please explain more specifically. Thanks.

Justin I think the below note is what winner is referring too.

3. Revenue from contracts with customers 2019-------2018
$’000
License revenue (i)----------------------------9,702------6,868
Consulting revenue (i)-------------------------6,987------4,507
Other Revenue-----------------------------------139--------178
Total------------------------------------------16,828-----11,553
(i) License and Consulting revenue is recognised over time, the unutilised portion of revenue is
recognised as deferred revenue in the balance sheet. For detailed breakdown of deferred revenue
refer to Note 17.

[winner69]

Justin I think the below note is what winner is referring too.

3. Revenue from contracts with customers 2019-------2018
$’000
License revenue (i)----------------------------9,702------6,868
Consulting revenue (i)-------------------------6,987------4,507
Other Revenue-----------------------------------139--------178
Total------------------------------------------16,828-----11,553
(i) License and Consulting revenue is recognised over time, the unutilised portion of revenue is
recognised as deferred revenue in the balance sheet. For detailed breakdown of deferred revenue
refer to Note 17.

Thanks forest

I’ve seen another breakdown somewhere (can’t find now) which split it down further ....actual license income was A surprisingly low proportion of revenues with support and consultant making up the greater proportion

[Cadalac123]

Why does that matter? You can be picky at revenue all you want, the reality is the revenue streams have all grown.

[Justin]

In 2019 financial year they did not turn profit because of the convertible note expense, Hope they can turn profit in 2020 financial year.

[Brain]

Why does that matter? You can be picky at revenue all you want, the reality is the revenue streams have all grown.

The consulting revenue will be labour intensive which can grow only by hiring more staff. The licensing revenue should be reoccurring and the part which should show very high growth.

[winner69]

Why does that matter? You can be picky at revenue all you want, the reality is the revenue streams have all grown.

Hit a nerve did I cadalac?

I didn’t say revenue wasn’t growing ...agree pretty strong growth though not outstanding.

I was pointing out the revenue split in light of the high multiples PLX trades out and how 150 million users is awesome.

All I was saying was that the parts of the business that generate huge profits like license fees and possibly some monetisation from the 150 million users is the smallest part of their revenue stream.

Support/implementation/consulting are the larger part and as brain points out very labour intensive, ie service related.

That mix may change and it needs to if PLX is continued to be valued as a pure software company with high margins when it appears (at least to me) more a service per se company.

We’ll see what develops eh

[forest]

Thanks forest

I’ve seen another breakdown somewhere (can’t find now) which split it down further ....actual license income was A surprisingly low proportion of revenues with support and consultant making up the greater proportion

17. Deferred Revenue
Deferred customer revenue relates to income invoiced to customers in advance during a financial
period, part of which will be recognised in the statement of comprehensive income in the subsequent
financial period. All deferred revenue is classified as current liability.



$’000----------------------------------2019-------2018
Deferred license revenue----------- 2,617------ 1,251
Deferred consulting revenue------- 1,271------ 1,195
Total----------------------------------3,888-------2,446

A bit more detail, not sure if winner was referring to this. What is noticeable that in 2018 the deferred licence and consulting revenue were similar, in 2019 the deferred consulting revenue only crept up while the deferred licenced revenue more than doubled. I think this could be a sign of better quality earnings for this company. What do others think?

[winner69]

In 2019 financial year they did not turn profit because of the convertible note expense, Hope they can turn profit in 2020 financial year.

I see the guy (saviour) who redeemed those convertible notes sold a lot of the shares last September at 80 cents.

. Not a SSH any more so no more disclosures ...wonder if he’s sold out completely by now