Tungsten was in the news recently when its former CEO and then-current Vice Chair failed in his attempt to buy the company (see here).

Tungsten Investor Day

I’ve written about Tungsten  several times before (see here), but now there is almost an entirely new management team.  The new team has been more transparent about the company’s prospects, including holding an investor day in February.  If you are interested in e-invoicing, the investor day webcast is worth listening to, though it is quite long.  See the investor section of the Tungsten website here.

Let me summarize my thoughts based on the presentation:

1.  It was painful to hear the new CEO throw the old one under the bus, but it was probably necessary to reset expectations. (And boy did the new team accentuate how bad everything was prior to their arrival–wow!  Never heard anything like that in my life.)
2. I have followed this company’s predecessor for more than 10 years.  The company has never had positive EBITDA.  Positive EBITDA is now promised for FY 2018.
3. The new team seems to be doing all the commonsense things you would expect, like selling the bank that had been acquired and improving the pricing model.  The new management team is also expanding the company’s supply chain finance offering.
4. It is sad to see the company that practically invented e-invoicing (OB10), especially in Europe, continue to struggle. In April, Tungsten will be down to 8 million GBP in cash.  If it sells the bank soon, Tungsten will have enough cash to last for a bit, if not the company will likely need to raise money again.
5. The company provides a fascinating glimpse into pricing practices and stickiness in the e-invoicing market.  As you will see from the slides below from the investor presentation, Tungsten discloses:
   • Its revenue is about 1.66 GBP per invoice.
   • It is raising price dramatically (70%) and not losing many customers
   • The company charges both buyers and suppliers, but more than half of the revenue now comes from suppliers.

This pricing data will be useful for other e-invoicing networks and procure-to-pay vendors to consider.

6. Underlying, non-price growth has slowed to 6-8%, which is likely slower than the market growth rate overall, suggesting that Tungsten is losing market share.  It’s also sad to see the lead OB10 once had in Europe lost.

Late Breaking News

As I was putting this post together, I received an investor alert that a unit of Morgan Stanley has acquired more than 9% of Tungsten’s shares.  Perhaps the recent investor day and board turmoil has put Tungsten in play?