June 25, 2024

ADB AGM highlights

E-invoice opportunity / new product initiatives

E-invoice drives accounting software demand; mgmt. is hopeful that spillover effect to be felt across entire software suites – fact ignored by investors largely

ADB leverages on its material accounting software market share to cross-sell its other product offering, aggressively (via discounts/promo)

A new product is ~90% ready to cater for micro size businesses

Recurring income

Recurring income contributes ~20% revenue or ~60% profit

Recurring income and growth profile underestimated by market e.g., software user increase from same client co.

Cloud experiencing robust growth rate

On-prime to cloud transition is unlikely as both caters to different clientele/purpose.

Margins / Op. leverage

Cloud software to experience material margin expansion as subscription base increases i.e., high op. leverage

Grant affected GPM in recent quarter because of accounting recognition timing difference; outsource expenditure (software design fees) paid whereas sales registers gradually over ~2-years i.e., GPM improves going forward

Cost conscious mgmt.


Challenges

Skilled manpower

Regional market expansion – ADB attempts to maintain 100% ownership

Would consider M&A provided price is right; aim is to expand client base and less for software ability