The Aussie small cap taking on the tech giants – Dropsuite | Summer Series

Bryce: [00:00:16] Welcome to the Equity My Summer series, proudly brought to you by CommSec, the home of investing over 12 episodes where deep diving into some of the most exciting, interesting and well known companies from around the world. Each episode we'll be unpacking one company with one expert investor. We'll learn from their process and hear why they like the company. My name is Bryce and as always, I'm joined by my equity buddy, Ren. How are you? 

Alec: [00:00:38] I'm very good, Bryce. I'm excited for this episode. Last year, we both set ourselves up with mentors to help us on the lifelong journey of investing. We wanted to keep building the skills of investors, learning how to better analyse companies and find great investment opportunities. And I set myself up with our expert today, Andrew Page. He is the Managing director of Strawman.com, an online investing community. And he's a real expert in Aussie small caps. That's the world that he loves to fish in the pond that he loves to fish in. And we're talking about an Aussie small cap today that he's particularly excited about an exciting stock in perhaps a boring field. But we'll get to that. Today we're talking about Dropsuite. 

Bryce: [00:01:23] We are. And a massive thank you to CommSec for proudly supporting the Equity Markets Summit Series. They are the home of investing. And if you've just started investing or looking to build confidence, CommSec has free tools and resources available before you even sign up to help you on your journey. Get a grip on all the investing basics with CommSec. Start investing with as little as $50 through the Commbank app. Go to commbank.com.au For more CommSec T&Cs and other fees and charges apply. 

Alec: [00:01:51] Now, while we are licensed, we're not aware of your personal financial circumstances. Any information on this show is for education and entertainment purposes only. Any advice is general. With that said, Bryce, before we speak to Andrew, let's talk about Dropsuite. Wait, I'm a little bit worried what you're going to say here. Look, we've had a lot of fun with this company. 

Bryce: [00:02:11] Have we? 

Alec: [00:02:12] Well, yeah, we keep saying it's boring. 

Bryce: [00:02:16] Yes. 

Alec: [00:02:17] That's going to be our first question to Andrew as well. 

Bryce: [00:02:19] Is this company boring? 

Alec: [00:02:20] Why did you choose such a boring? 

Bryce: [00:02:23] It's fair enough. Sometimes boring companies result in great returns. 

Alec: [00:02:28] And great returns from boring companies can lead to, not boring life. Or at least a not boring night in Vegas. 

Bryce: [00:02:37] Someone wrote that down.

Alec: [00:02:39] Put it on a T-shirt. Now, the returns of this business are up 33% year to date. Okay? Up 500% in the past five years. Okay. Like not boring. 

Bryce: [00:02:52] No, not boring. 

Alec: [00:02:53] But tell us what it does. 

Bryce: [00:02:54] Well, Dropsuite, Ren, is a cloud backup company. That's it. 

Bryce: [00:02:59] Okay, okay.

Alec: [00:03:01] It's a it's a. Yeah, it's a software platform that provides cloud backup. As you said, archiving and recovery services really focussed on business continuity and compliance. 

Bryce: [00:03:11] Enterprise. 

Alec: [00:03:12] So this isn't like you backing up your iPhone to the iCloud. It's the Department of Homeland Security. I don't know why I chose American Department. It's the Department of Prime Minister and Cabinet in Australia needing to, they already would back it up to some server. It's then like having a backup for the backup so they don't lose all their. Yeah. 

Bryce: [00:03:35] Well yeah. And so their biggest sort of target market is everyone using Microsoft, sorry not everyone. Enterprises using Microsoft 365 using Google Workspaces and the like. I think back to a time at Woollies. We use Google workspaces. Dropsuite would be coming in pitching Google guys you've transitioned to the cloud. Who's your backup service? And then they'd be coming in and I think the important thing here is understanding that it's not just backing up like the files that you have saved in your drive. It's all of the systems that are within Woollies. It's not the PowerPoints that I've been saving overnight. 

Alec: [00:04:14] Although, yes, the PowerPoints would still. 

Bryce: [00:04:16] Oh, absolutely. But the level of it's.

Alec: [00:04:17] Also like customer credit cards. 

Bryce: [00:04:19] Exactly. It's everything that is is in the cloud. 

Alec: [00:04:22] It's how many everyday rewards points I have. Oh, nice. So they if they get hacked, they lose that. They'll be a ruckus. And like, the obvious question is, well, aren't they just competing with these big tech giants that you've named because, like, Woolworths is a big user of Google products. They might use the Google Chromebooks.

Bryce: [00:04:45] Yeah. 

Alec: [00:04:48] And you'd be like, well, surely Google are already backing up this stuff. But for big corporates it's like. You want a non Google storage because if Google gets hacked you want to like a failsafe.

Bryce: [00:05:00] It's a section. 

Alec: [00:05:01] And so Dropsuite. I mean it's pretty small like $150 million market cap company is finding itself swimming in a pond with some very big fish, but isn't necessarily competing against them directly. The companies that it does make me think it is competing against here it is more like a Dropbox. 

Bryce: [00:05:23] It's the same thing though. Like that would be my equivalent of iCloud. 

Alec: [00:05:27] Yeah, but it's like, yeah. Anyway, let's not get too far into this. So they did backup, and that's why we keep saying that's why I keep saying it's boring.

Bryce: [00:05:34] They do backup. 

Alec: [00:05:35] But like, you know, it would be a very sticky business. I imagine it would be quite the customer switching there would be hard for businesses to switch away from. Like, I don't think it would be as sticky as like zero accounting software in terms of switching costs for customers. But it would be pretty hard, I imagine, to switch. 

Bryce: [00:05:53] So Ren, the company, it's a Singapore based company. It originally started out with the name Drop My Site in September 2011, when founder John Fear and his business itself needed a backup solution and he couldn't find one. So he then raised 300 grand in a first round of funding on a Singaporean television show called Angels Gate. 

Alec: [00:06:16] Oh, we should definitely check if we can find some of that footage. Yeah. We will. We'll drop it.

Bryce: [00:06:22] Yeah, yeah. So he raised 300 grand from a television show, and then in 2012, developed the email backup system called Drop My Mail. 2014 made another product for smartphone backup called drop my mobile. And then in 2016, rebranded to Dropsuite. Encompassing this all and going for that enterprise level. 

Alec: [00:06:45] Oh, that makes me think it is like the sane in The Social Network where Justin Timberlake's character, who is the Napster guy? Says he's working at the restaurant and he goes, drop the the. Just have Facebook. 

Bryce: [00:07:00] Oh, yeah. 

Alec: [00:07:01] It's like this. It's like, drop the my. 

Bryce: [00:07:04] They then listed here on the ASX via back door listing in 2016. They've got some pretty good growth or industry tailwinds which he kind of alluded to Ren, that they're playing in a very big industry. Well not big. They've got some big competitors.

Alec: [00:07:21] Yeah, the big industry is every single piece of data. Yeah, that we use now it's massive. Well yeah. Like I mean, you know, like the there's just a massive amount of data being created and, obviously cyber security is more of a, I guess a challenge or an opportunity for those guys. There's also a lot more regulatory pressure around the use of data and the security of data and making sure there's profit backups and all of that stuff. So, yeah, there is a strong tailwind there, but it's just a massive addressable market. I think you pulled this number 400 million office 365 and Google Workspace uses globally. I actually reckon that's low. 

Bryce: [00:08:08] Oh this is from there this is from the annual report. So well take it up with the Dropsuite maybe that would be like if you know, equity mates. Well I guess user yeah, maybe like enterprise level. 

Alec: [00:08:20] But who has a job that has a computer that isn't using Microsoft or Google in some respect. 

Bryce: [00:08:31] My wife. 

Alec: [00:08:33] No, she uses outlook. 

Bryce: [00:08:35] Is that 365?

Bryce: [00:08:36] Yeah, yeah, yeah. 

Bryce: [00:08:37] Office guy I think of you have used it since high school. 

Alec: [00:08:43] Yeah. Outlook is Microsoft. 

Bryce: [00:08:44] And it's all cloud or everything on the lappy. 

Alec: [00:08:47] Everything's on the cloud. That's seriously.

Bryce: [00:08:50] No it's not.

Alec: [00:08:51] It would be. 

Bryce: [00:08:52] There's still a huge put it. This is the code of this Microsoft. 

Alec: [00:08:56] Does Harriet ever work from home? 

Bryce: [00:08:58] Yeah.

Alec: [00:08:59] It's on the cloud.

Bryce: [00:09:00] No that's through. It's through that old archaic program where you have to log in and have a second desktop running. What's it called? 

Alec: [00:09:07] That's still. But how do you think she's accessing that? 

Bryce: [00:09:10] She has a hard wire that runs under the harbour. 

Alec: [00:09:14] She's either saving every file locally or it's somewhat connected. 

Bryce: [00:09:19] Locally saved. Carries her desktop in her handbag. 

Alec: [00:09:24] Okay. Anyway, whether or not those 400 million users is low or not, what we can conclude from this is Bryce has no idea what his wife does for work. 

Bryce: [00:09:35] Harriet, if you're listening, I do. Anyway, yes, 400 million office 365 and Google Workspaces and also Ren, a cyber threats. Cyber security point. They estimate that the cost of cyber attacks by 2025 is going to be $10.5 trillion. So, as you said, a lot of focus by can't remember who was speaking to you in the office the other day, but they're saying that when they're speaking to boards. In fact, I think it was Emma Fisher. When they're speaking to boards these days, the sense is it's not a matter of if we're going to get attacked, it's a matter of when. So these type of security measures are incredibly important in front of mind for boards around the world. 

Alec: [00:10:13] Yeah. All right. Well, I think we've kind of summed it up to just put some final numbers to it. Dropsuite, it is in more than 100 countries. It's got more than 100 employees. So your country to employee ratio is great. 1.1 million paid users, 33.4 million annual recurring revenue. I'm going to say your paid user to total revenue number ratio. Not great. Opportunity. 

Bryce: [00:10:44] Big opportunity. Well with that. 

Alec: [00:10:46] So the average average revenue per user is like 30 bucks. 

Bryce: [00:10:52] You're asking the wrong person. We'll have to ask Andrew. Although we don't, I guess so in those numbers. 

Alec: [00:10:58] Interesting backups that shape, I guess. Like. Yeah. Anyway, let's, let's stop speculating. Let's get to Andrew.

Bryce: [00:11:06] Before we bring in Andrew. If you've just joined us but are feeling a little overwhelmed with where to start or confused about some of the investing lingo in today's episode, then CommSec Stock Content Hub could help stock up on tips and tools to help you find and research a stock and understand the stock market. Visit CommSec.com.au for more. 

Alec: [00:11:24] We'll be right back with Andrew after this short break. 

Alec: [00:11:37] Andrew Page, welcome to equity markets. 

Andrew: [00:11:39] Hey, guys. 

Alec: [00:11:40] So Andew, we've asked a company of your choosing to talk about today. And it's one that we have summed up as boring. Dropsuite all about cloud backups. So, we want to start by getting you to tell us a little about a little bit about the company and explaining why we should get excited about cloud backups. 

Andrew: [00:12:09] Well. Now that you say that. Yeah, I guess it is a little bit boring. But boring can be beautiful, right? And often I think, well, I'm not the brightest light in the harbour. I think what you really want is a company that's boring. It's easy to understand what was really attractive economics. And, I will say the one thing that's not boring are all the metrics. So, it's difficult in an audio format, but for anyone listening, just go to one of their latest presentations. There's usually a few slides in there where you see the, the, the general character is a bar chart going bottom left to top right. You know, whether it's revenue or profit or cash or users or, you know, any anything that you care to imagine is going in that right direction. So that's nice. That's maybe a little less boring.

Alec: [00:12:59] Yeah. No, I'm, I'm being a little bit facetious, going from $1 million in revenue to $20 million in revenue in less than six years or seven years. Like, that's that's not boring. 

Andrew: [00:13:11] It's not boring. The way the best way to pitch it is, I think at this stage everyone's familiar with Google Drive. One drive, you know, it's just basically a cloud backup. It's it's not that confusing. The same requirement. Well, enterprises have the same kind of requirement, except it's a little bit more complicated than that. One, it's just good to have backups, but two, you want to have a backup that is with a different provider, in fact, probably in a different geography for some of these enterprises. In fact, there is a lot of increasing regulatory requirements for you to have your data backed up. There's cybersecurity considerations in terms of having your data backed up. And this is just being highlighted again and again with all the sort of various events that sort of happening around the world. And in terms of like the addressable market, it's absolutely massive. And I'm going to forget off the top of my head. But the number of large enterprises that have adequate backup solutions is woefully low. And so what these guys do is they'll come in and they say, hey, we're going to backup all of your emails, all of your files, all of your customer interactions. And and the really cool thing. Well, one of the really cool things about it is that they operate through a, a partner type program where it's basically that customers aren't really the end customers who are using this like, say, a large corporate. It's a managed service provider. These are these relatively small I.T teams that these big corporates deal with. So they hire them to do a bunch of IT work, including integrate backup solutions. So they will, the nice thing about that is you're obviously losing some margin okay. Because there's an enterprise between you and your customer who's clipping the ticket. But at the same time they're doing all the what they're managing the customer relations. You don't have to hire people directly. It makes you scale very nicely. And I'll stop at that point. But that's that's basically it in a nutshell. And the evidence so far is, is that they're not only growing a lot at the top line. And you guys know that when it comes to small cap tech growth, okay, a lot of companies have been growing at the top line. And what's changed radically in the last 18 months or so is the market has rightly now focussed on the bottom line as well. It's like, well, it's all good and well if you're having a bunch of sales, but if you're not making any money and there's no clear path to actually generating cash flow, we're a little bit worried. Well, these guys have pivoted and they have made profit. They are in profit. They're making free cash flow and they've got a fortress balance sheet. So you add all of that together. Not boring.

Bryce: [00:15:55] Fair call fair call. So one question I had when looking at it, Andrew is just, I guess, the competitive landscape that they're in, because my assumption would have been that, you know, I think about how I do all my backups and it's straight to iCloud. It's, you know, it's Apple. We have Google Workspaces at work, but you're saying that this is an addition to the cloud backups that we already have. Like, how do you think about this company given the huge players that are in cloud at the moment? AWS, Azure, like. 

Alec: [00:16:28] And I guess to build on that, if, you know, if you need a second backup, why don't you just go to one of the other massive tech giants. 

Bryce: [00:16:36] Or probably Google offers a, I don't know, I could be guessing here, but a backup service, surely?

Andrew: [00:16:41] Yes. So the requirements that we have, a very different to a large organisation, you know, one that operates in multiple jurisdictions as all kinds of. So it's not just like your your Gmail that you're backing up. It's all the internal stuff on the internet. It's across, you know, 100 different offices in different locations. There's different compliance and reporting and regulatory regimes around that. It's complicated is the answer. So it's not just a matter of saying, oh, we're just going to sync with our iCloud and everything's going to be fine. It's too big and nefarious. Any large modern organisation tends to sort of when you sort of peek at things a little bit, you see that there is layers upon layers of legacy systems that go back decades when corporates in, you know, take on a new system, it's a big deal. It takes a lot of money, it takes a lot of time. It's a big investment. And then even when better things come along, usually you're reluctant to replace it because it takes so long. There's usually all of these issues. And so as a result, you tend to have these sort of nefarious complex of systems that are all behind the scenes. So it's complicated. And that's why you can't just have a big, easy solution. All of that being said, Microsoft have announced not too long ago that they are getting into the back up game. In fact, Microsoft 360 back up and archiving product was actually announced 18 months ago. And then there was a bit of an announcement at an event earlier this year. And you can see it in the share price, for, for Dropsuite. And it actually had this incredible run from nearly when nearly doubled, in fact, from about $0.20 all the way up to about $0.37. It got a nice favourable write up in the IFR, which I think showing a bit of light on it. And then I was like, oh, Microsoft is getting into this game as well. And shares dropped right back down against a very sudden fall because it's like, well now Microsoft's doing this. But there's a little bit of nuance here. And we've spoken to Sharif, which is the long standing CEO, and also should I, one of the major shareholders really got a lot of time frame. And his view was like he was a bit perplexed. Is like, Microsoft announced this, like, 18 months ago. What's the market freaking out for now? Secondly, we're much cheaper than this product. Thirdly, generally speaking, if you speak to anyone in IT security, the process is usually to recommend a third party backup provider. If I'm using Microsoft as you are and I'm using Microsoft 360 back up and Microsoft becomes the target of an attack, it's just generally best practice to sort of spread the eggs around into multiple baskets kind of thing. And the other point being is that, as I said, like the penetration is so low on a corporate basis globally that you have a look. Let me take a step back. I think investors are right to consider the competitive landscape, and they're right to get concerned when there's a very competent, perhaps even aggressive competitor that's out there. But virtually, unless you're a monopoly, every company has competition. So it's the fact that it's like people have woken up to the fact that, oh, there's other people that do this. Yeah there are. And before Microsoft and some of the bigger players announced that there already were. Right. But they're demonstrably winning share at a significant rate and growing. Well, there's something to be said for when there is an industry transition, a structural transition that is underway. The tailwinds can be so significant that it doesn't have to be. It's only the top player that sort of wins in this space. So I would say that it is something to keep an eye on. But given all of that, it's not existential in any way, shape or form to my view.

Alec: [00:20:29] Yeah. Well, let's get to, how you analyse a company like this. As you said, there's competitors both big and small, but the market is big. And so as an investor, you're saying there's an opportunity here. And my job as an investor is to look out at the landscape. And in this market, it's a global landscape and pick the companies that are going to win. So when you look at Dropsuite, when you start to try and make that assessment, what are the the metrics that you're looking at and how are you analysing a company like this. 

Andrew: [00:20:58] Yeah. You know it's a little bit harder when you're dealing with companies that you don't have any direct experience with. If you're dealing with like Apple, for example. I mean, everyone's familiar with their their consumer product. We know what they sell. We can make our own informed decision as to whether this is a good product or not. I am not a client of Dropsuite never will be right. And so it's hard to say. 

Alec: [00:21:23] I don't know Strawman could get that size. And then you'll need to have multiple backups. You know all your proprietary research 

Andrew: [00:21:31] Hope springs eternal. Yeah, maybe. But one thing that is. So I start at the top, right? Is, they selling more of their product this year than they were last year? What's the trend there? You know the trend. I'm not a big technical analyst, as you guys know, but I do think that the trend is your friend in sales and business momentum is a real thing. And so what I, you know, undeniably true at this point is that each year that goes by, they get more and more and more customers and that translates into more and more revenue. So that's a great starting point. You know, something is clearly going right there. Now it may just be that if you've got an awesome sales team, but they're selling something that's worthless, in which case people realise after 6 to 12 months, like, wait, is that guy I've been had? I don't actually need this at all. So that's why churn is pretty important as well. So when you get increasing sales and very low churn, it's like someone finds value in this. And once they get this solution, they keep the solution. That's pretty cool too. And then a third little angle on that is that you have what's called the AAP who AAP you, the average revenue per user. And that is growing as well because they can add extra features and bundle other things on as well. So I've been convinced by the value prop for keeping it and I'm adding stuff to it. And if they put the prices up I'm happy to pay it. That's a very strong kind of signal. And then that's sort of couched in the context of, well, what is the opportunity here? If there's like three clients globally and you've got two, well, you might be on to a really good thing, but you're going to plateau very, very shortly. And again, as I said there's a big opportunity globally for this. So that's all fantastic. I think what you then need to do is you just. Proceed down the income statement. And you remember a few years ago, SAS was all the rage, right? And what everyone used to say about SAS was that this huge amount of operating leverage, every incremental user or client I get is virtually no cost. You know, I'm just running an AWS service somewhere. There's a little bit of onboarding, there's a little bit of cost in the sales, but that's it, right? Once I've got you, I've got you and I like it. It's wonderful operating leverage, which means that as my sales continue to grow, my profit grows at a much greater rate. So I've got a fixed cost base and a very high gross margin. Well, this is actually demonstrating all of that kind of stuff. So the economics here are really, really attractive. They are scaling effectively. They are pursuing and achieving very strong growth internally funded. It's not just the good grace of the market where they have. Relied on capital, raise off the capital, you know. Remember a couple of years ago I'd raise at 20 times sales and and basically just effectively buy sales. Right. And then it's sort of good until it's not what they have actually realised. The benefits of this success model, which is to grow and to achieve leverage and to achieve scale and to expand margins. And it's another thing to sort of look for. There is not only good operating margins and good net margins, but expanding margins on top of all of that. So there. Long answer, but the other things that I've been looking at. 

Alec: [00:24:43] Nice one. So we've covered it a little bit so far. But I guess what's the bull case here? And in particular, when you think about long term and sustainable competitive advantage, where are you saying that with a company like Dropsuite. 

Andrew: [00:24:56] Yeah. So it's still with a lot of companies. You have that sort of 0 to 1 moment. It's like, hey, we've got this kind of new product, this new way of doing things. Is it going to work in them when we actually try and offer it out there to customers? Well, is there any sort of appetite for this kind of stuff? So we're past that point like, yes, the answer is yes. There's an appetite, there is a demand, there's a growing demand, and there's a big opportunity for this. And it's not just all blue sky. And you know, we see a need for this now. It's actually sort of happening. So now we're just really at the execution phase. And I want to downplay it. But you know they've got established teams got bit over 100 employees. Most of them are developers by the way. So they put a huge emphasis on the tech stack that they've got. But this is just a matter of once you find your rhythm as a business that's just continue to roll this out. Salespeople knocking on doors, winning customers, integrating it effectively, supporting your customers. Wash, rinse, repeat and just grow and grow and grow and grow. And as I said, if this was we're only in New Zealand and we're 80% penetration. I was like, well, okay, that's nice. You probably will never. No one ever gets to 100%. And what next? Well, they've got a very long runway, there today. So I, I just want to say each reporting period that have you more or less accounting for the normal vicissitudes of business and life and economic cycle. Have you more or less added more people and are you continuing to scale effectively? And the biggest risk, often when you get to this sort of sweet spot is very, this is one of those companies, it's the classic overnight success that's been ten years in the making, which, you know, the market sort of oh, look at this. Like not realising that there's a poor sucker that 's just been slogging away weekends and nights for decades trying to get this thing off the ground. Well, we're at that point, we've passed all of that. We've got 20 something I should know if it's off of my head, $22 million in cash, no debt, extraordinarily well funded, free cash flow everywhere. I think one of the other things to watch is, there's nothing more dangerous than a management team with a bit of hubris and confidence and a pile of cash burning a hole in the pocket. Because you can, you can just make an acquisition and you can grow the business really aggressively, and you can do all kinds of things. But history would tell you that, generally speaking, most inorganic opportunities don't work out. I think the stat is one third. I'd value one third, it's a wash and another third loses value in terms of acquisitions. So I think you want a management team that understands the critical importance of capital allocation and return on invested capital. Like the longer I've been doing this, the more I've realised that actually there's two core elements of a good CEO. One is they manage the culture and two, they manage the capital allocation. And if I get those two parts right, everything else tends to fall into place. So that's something else I think to watch because the potential is to look how well we're going with a puffed out chest out. We're doing fantastic. Let's go buy this big American company. And how many times can you think of where that's gone really badly for shareholders, even when there's this really cool little I tell me, I can tell you, I've got a number of companies of these brilliant little core units and they just, like, wasted their opportunity by expanding into other areas. So that's something else to sort of watch. I think I've gone a bit away from your original question there. 

Alec: [00:28:25] No, no, no, it's, it's all it's all very interesting and want one thing when I look at Dropsuite and I think just generally I've learnt over, I guess running equity mates and also looking at the market and the history is timing your capital raise and going big when you raise capital is so important. Like we look at, we look at the survivorship of the tech wreck in 2000. And you see companies like PayPal and Amazon. Well we talk about less is the fact that they both raised money within six months of the market collapsing. Like raising big and rising at the right time is important. Dropsuite would have been about a $100 million market cap, and they raised $20 million in 2021, which in hindsight was a very good decision at the time. So, you know, now they've got plenty of runway. But you know, there's always risks and there's always things that could go wrong. So what would be some of the things that break your thesis? Where's the red flags or the bear case come. 

Andrew: [00:29:25] Look when the runway is as long as it is. You would expect a business that is executing well to sustain that very aggressive top line growth. So when you sort of see and you know, one swallow does not a summer make is the saying. So you don't want to be the kind of investor that jumps at every shadow, because even the best, best companies in the world will have a bad quarter from time to time. This is nothing structurally about the business. It's just this is business, right? You know, well, big contract didn't come through that we expected or this happened or, you know, the global economy got its knickers in a knot or whatever it happens to be. It doesn't really say anything about the business. But when you start to see what might be termed more of a sustained slowdown in growth or, God forbid, a flatlining of growth or, you know, a reversal of growth, that would be a huge red sign, because clearly, you know, if your attention is not great, if your sales growth is not great, no matter how great your operations are and how efficient you are with the resources and time that you've got, that is a very, very difficult situation. Now, it might not be too much of a problem if you're talking about a company that's on a PE of six and this is a company having a PE of, well, CommSec telling me 200, right? So that's a huge problem. And we've seen examples of that where it's like, hey look, the company's fine, it's viable. But it was like the market was expecting, you know, 20% compound growth for the next decade. And now we're all of a sudden thinking low single digit growth is a situation where, yeah, okay, the business is more or less fine. But the valuation was way off. And so this thing is priced for growth. So it's not just a matter of whether they might even get some okay growth. But it kind of needs to be sustained because that's in the price. My thesis is not as attractive as it, as it was, but my thesis really is that and this is what I think the market tends to miss, is that when you're sitting and this is, you know, what brokers and analysts do when they sit down with their spreadsheets, it feels disingenuous to plug in 20% sales growth for ten years. Like, it just it seems unreal. It doesn't feel as that you're being conservative with that kind of stuff, and it certainly doesn't feel conservative that you start assuming things like terminal net margins of 20% or something like that. But when you see companies that are actually delivering on some of these, that have the capacity to do that, and I think Trump is demonstrating that is that you tend to be surprised by the longevity of growth and the way that the economics work out. So you can actually get a situation where it's like, yeah, okay. The PE seems exceedingly high now, but it's off a tiny base as they continue just to prosecute that really attractive sales growth, the margin ends up. You can get to a point very easily where in the next few years you guys like, okay, we were sort of like 0.3 of a percent earnings per share, but now it is $0.06 in five years. I mean the percentage growth is insane. But it's sort of that combination of working off a low base is the jaws of that operating leverage open up. It can be deceptive. So I think what you have to if you're a buyer at the current price, I think you have to be the kind of person to realise that the money, maybe. I mean, anything can happen in the short term. It could double. It could be half. I have no idea. But if you want to sort of see that sustainable fundamental underpinning help drive the price forward, you need to give it three, four years because the industry, the, the finance professionals, quote unquote, they're all looking 6 to 12 months ahead. Your advantage as a private investor is being the kind of personal I can think beyond that. I can think 2 or 3 years. And I think if you're thinking in those time frames and you're thinking that these things are possible, then I think that's when you will see the true value prop being realised that the current price. And at this point I wouldn't want to override the putting in. And you know it's not now Bitcoin kind of returns but it's probably going to be something I would imagine over a 3 to 5 year period which is market based. and I think anything that falls in that bucket is good, particularly when you've now removed any funding risk or any balance sheet risk. And, you know, even if you're a macro focussed investor and things are pretty scary on the macro front right now, it's like, well, these are a critical business solution. So I don't think even things get tough. The customer is not going to tear up their contracts and walk away, and they're not relying on banks or the market for funding. They loaded up with cash. So they're very, very safe from from that point of view. Just give it time, buy some shares, check it under the mattress. Come, come and check on me. And in three and five years time. 

Bryce: [00:34:09] Nice. Well, Andrew, we'll leave it there. I think, as always, it's an absolute pleasure chatting to you. Love hearing about how you, approach the stocks that are in your portfolio. And I know a lot of the community love when you, join us on the show as well. So thank you so much. A pleasure as always. 

Andrew: [00:34:25] It's always my pleasure, guys. I love to chat. Thank you. 

Alec: [00:34:28] And before we go, a huge thanks to our summer series partner CommSec, the home of investing. If you're looking for more support and resources to build confidence in the market, head to their content hub. Otherwise, you can get $0 brokerage on your first ten trades for Australian markets. When you join brokerage on US stocks from just 5 USD, and invest from as little as $50 through the comeback app. Download the Commbank app today or visit commbank.com.au. CommSec T&Cs and fees and charges apply. Investing in overseas markets exposes you to additional risk. 

Bryce: [00:35:04] Now stay with us for the next episode. We're halfway through the series and joined by Tobias Carlisle to talk about InMode.