ASX:8CO
8Common Ltd
Investment Summary
The fund managers believe 8Common Ltd. (8CO) is currently facing challenges, as evidenced by a 21% decline in revenue despite a 9% growth in recurring and transactional revenue. The slow pace of onboarding Federal Government clients has been a major factor in the company’s struggles, as elections, security upgrades, and bureaucratic hurdles have delayed scaling. However, the original investment thesis remains intact, with the company still poised to generate substantial recurring revenue once fully deployed. The fund managers continue to hold the stock, believing the company’s government foothold could attract potential acquirers as its strategic value increases.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Manager
Mereweather Capital
Date
31 Jan 2025
Price
$0.03
Medium
Monthly Report
Commentary
Mereweather Capital Inception Fund continues to hold its position in 8Common Ltd (8CO) despite a disappointing quarterly result, which saw a 21% decline in revenue year-on-year. Although recurring and transactional revenue grew by 9%, the weakness in implementation and support revenue led to a much lower-than-expected outcome. The investment thesis for 8CO remains intact, centered on its successful contract with the Federal Government, providing core expense management software with significant recurring revenue potential. While the slow onboarding process has been frustrating, with only 47k users onboarded out of a potential 100k, the Fund believes the long-term opportunity remains compelling. The market capitalization of 8CO is currently around $5m, yet the business could generate $8-10m in recurring Government software revenue once fully deployed. Given the strategic value of its foothold within the Federal Government, Mereweather Capital Inception Fund sees potential for further growth and believes the company may attract a future acquirer as the Government rollout progresses.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.