Dropsuite, the email backup provider company experienced a fall in the paying users. As a result of which the company took a backstep. This also resulted in the fall of the stock price by 58% to 4.1c when the market opened on Wednesday morning 31 October 2019. The cloud software play recorded a sudden fall in the paid users about 420,000 paid users. It was a big loss for the shareholders in the mid of year.
In the month of May 2018, the Dropsuite stock (ASX: DSE) climbed almost 500 % from 2.7c to high of 16.2c in July 2018 when it was reported a higher customer numbers and cash receipts.
Within a period of 3 weeks, in the month of July the stock price jumped 40% after netting 100,000 new paid users by the help of extensive marketing campaign.
By the end of August, the number of paid users of Dropsuite were 750,000 in number. This count was 189,000 in same period last year. the growth in the count was driven by massive growth in email backup.
However, a client from Latin America deactivated the backup services. As a result of this there was a fall in 420,000 paid users. Hence the number of paid users got halved to 350,000. These 420,000 paid users were believed that they were not actively utilizing their email service.
The boss of Dropsuite, Charif Elansari states that the drop in paid users is definitely the reason of short-term frustration and is also the key cause of disappointment. Further he is hopeful that over the period the business will again gear up to easily bear these changes as we move ahead. Although the drop in the paid users took place recently, the company says that it has already backup and potential to meet higher churn.
There was a fall in the revenue by 44% from September. The annual recurring revenue for the month of November is $4.6 million. The company received quarterly cash receipt of $1.1 million in the last quarter. The company has already spent $343,000 and is left with $3.6 million in its kitty. Further company has made plans to spend $1.9 in this quarter.
For the quarter ended September 2018, the net cash used in the operating activities $0.343 million. The major cash outflow was due to payments made in product manufacturing and operating cost, advertising and marketing, staff cost, administration and corporate cost. The net cash used in the investing activities was $0.127 million. The net cash and cash equivalent at the end of quarter was $3.564 million. For the half yearly period, the company reported an increase in the revenue by 70% equivalent to $1.91 million. The annualized revenue run rate increased by 91%. Gross margin increased by 81%. There was a fall in EBITDA by 30%. The position of cash by the half year end was $4.03 million.
The market price of the share is A$0.044 with market capitalization of A$47.19 million.
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