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Revenue: $3.4 million in the first six months, up from $3 million in the same period in 2023.
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Bookings: $2.4 million, down from $2.8 million in the first half of last year.
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Cash Overheads: $11.7 million, significantly reduced from the previous year.
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Adjusted EBITDA Loss: $8.5 million, improved from $14.8 million in the first half of last year.
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Cash Position: $9.1 million at the end of the first six months, compared to $18.2 million last year.
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Cost Base Reduction: Reduced from $45 million annually to $20 million, a 55% reduction.
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Expected Bookings for 2024: Projected to be between $13 million and $15 million, with Q4 expected to be weighted.
Release Date: September 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Cirata PLC (WANSF) has successfully reduced its annual cost base by 55%, from $45 million to $20 million, creating significant operating leverage.
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The company reported an increase in revenue to $3.4 million in the first half of 2024, compared to $3 million in the same period in 2023.
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Cirata PLC (WANSF) closed 31 contracts in the first half, with 16 being new or expanded contracts, indicating growth in customer acquisition and retention.
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The company has made substantial progress on its product roadmap, aligning new releases with customer feedback and market needs.
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Cirata PLC (WANSF) has strong partnerships with major companies like IBM, Microsoft, and Databricks, validating its product market fit and strategic direction.
Negative Points
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The company experienced deal slippage, with some larger deals being delayed from Q1 to Q2 and Q2 to Q3, affecting revenue timing.
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Bookings decreased to $2.4 million in the first half of 2024, down from $2.8 million in the same period in 2023.
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Despite cost reductions, Cirata PLC (WANSF) reported an adjusted EBITDA loss of $8.5 million for the first half of 2024.
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The company’s cash reserves decreased significantly, closing the first half with $9.1 million compared to $18.2 million last year.
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There is a risk that cost-cutting measures could impact growth opportunities if not balanced with necessary investments in key areas.
Q & A Highlights
Q: Can you address why we continue to see deal slippage and what are the mitigations? A: Stephen Kelly, CEO, explained that while there have been improvements in sales execution and pipeline reviews, larger deals have experienced slippage from Q1 to Q2 and Q2 to Q3. The company is focused on improving predictability and closing these deals in the second half of the year.
Q: Can you explain what you mean by improved operating leverage? A: Stephen Kelly, CEO, stated that operating leverage involves driving growth without increasing the cost base. Cirata has reduced its annual cost base from $45 million to $20 million, a 55% reduction, while maintaining similar bookings and revenue levels. The focus is now on expanding revenue growth.
Q: How do you claim product market fit given the low level of bookings? A: Stephen Kelly, CEO, noted that product market fit has been validated through direct customer and partner feedback, particularly in data integration use cases like disaster recovery, migration, and continuous data movement. The company is aligning its roadmap with customer needs for future growth.
Q: How do you balance cost-cutting with building a growth business? A: Stephen Kelly, CEO, emphasized that the initial phase focused on reducing costs to drive the company towards breakeven. With a 55% reduction in the cost base, the company is now focused on growth, ensuring sufficient investment in engineering, roadmap, and go-to-market functions.
Q: What are the most important conclusions from your strategy review? A: Stephen Kelly, CEO, highlighted that both product lines, data integration and DevOps, have strong customer support and product market fit. Geographic expansion, particularly in North America and internationally, is crucial for growth, and the company is focused on executing this strategy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.