Well done. I understand the company much better now, thanks to you. Great job describing the business segments and the transition it's been undergoing.
Hi Ron! That’s so thoughtful—thanks for your kind words. I don’t post often, but when I do, I’m really happy to know that people like you are looking forward to them.
Yes, I understand your perspective; however, I prefer to see the share price not moving as an opportunity rather than a threat. I discussed the transformation that Nedap is currently undergoing—transitioning into more of a SaaS player, much like Adobe, Autodesk, and Oracle have done. This shift from large upfront payments to smaller recurring payments impacts short-term revenue. However, if the transition is executed correctly, it has the potential to significantly improve Nedap’s long-term numbers. I recommend revisiting the section titled "Insights from Transitioning to a Subscription-Based (SaaS) Model" for more details on this, and let me know if you still have questions afterwards!
I believe this also answers your second question regarding revenue and cash flow instability. With this transformation, Nedap is gradually achieving greater revenue stability because customers are moving away from large one-time purchases in favor of smaller recurring payments. When combined with high retention rates, this should lead to more stable revenues over time. My expectation is that Nedap will become less cyclical, resulting in increasingly predictable revenue streams.
Regarding the payout ratio, Nedap’s is close to 100% because the CEO prefers not to hold idle cash within the company, opting instead to return it to shareholders. Additionally, you should factor in the 5% dividend yield when considering the stock’s returns. That said, I hope that past performance is not indicative of future results and that Nedap’s transformation into a SaaS player will lead to a stronger stock price in the coming years!
Thanks again Ron, I'm really glad to have you reading the stuff I write :)
Thank you very much for the quick response, that's what I really thought it was because of
the transition to SaaS, the company looks interesting and has many advantages. I'm having a hard time with the high PayOut. What do you think of the management? Are there any questions about this?
And thank you very much again! I really enjoyed reading and I will read again.
Yes, fair enough. I don’t see the high payout ratio as a major negative. Sure, I’d prefer it if the company could reinvest at exceptionally high rates of return, like Dino Polska does. However, I appreciate that Nedap’s management is straightforward enough to acknowledge, “We can’t deploy this capital at highly attractive returns, so we’d rather return it to shareholders and let them reinvest it as they see fit.” That kind of honesty and discipline in capital allocation is something I really like actually.
Since Nedap’s business segments are no longer capital-intensive after transitioning from hardware to software, they simply don’t require large amounts of cash for reinvestment. CEO Wegman’s approach of not allowing excess cash to create complacency within the company—preventing teams from carelessly throwing cash against unattractive returns—is, in my view, a sign of responsible management. Ultimately, the high payout ratio reflects more of a disciplined approach I think. That said, management should lower the dividends for 2024 because of the declined profits. If that doesn't happen, it would be a red flag. I'll keep my eye on it! ;)
What an awesome analysis! Great job. I am here for those kind of articles (no the usual click bait) thanks a lot
Thanks Michael. Yes it's a win-win imo!
👍👍
Thanks for the great read Luuk! Keep up the good work :)
Thanks for taking the time to leave a comment Bouke! :)
Well done. I understand the company much better now, thanks to you. Great job describing the business segments and the transition it's been undergoing.
Thanks! Excited to see what the future holds for this one.
That was a great read, very in depth. Thanks for sharing!
Thanks for taking the effort to let me know Stuart!
Thanks for sharing!
Just today I was thinking about you, when will you post another article that I will wait to read.
I started reading and was really happy with the idea, I have cash waiting to be invested and I am looking for the next company..
It is true that I try to underestimate technology stocks, but after reading that it has 99% stickiness, I was very excited.
But!, I went to see the stock chart and was completely disappointed. What happened to it? Since 2018, they have barely risen 40%
Beyond that, its reports also show a certain instability in revenue, cash and a Payout ratio of almost 100%
I would love to hear your opinion
And again, thank you very much for investing your time and writing in such a beautiful and clear way!
Hi Ron! That’s so thoughtful—thanks for your kind words. I don’t post often, but when I do, I’m really happy to know that people like you are looking forward to them.
Yes, I understand your perspective; however, I prefer to see the share price not moving as an opportunity rather than a threat. I discussed the transformation that Nedap is currently undergoing—transitioning into more of a SaaS player, much like Adobe, Autodesk, and Oracle have done. This shift from large upfront payments to smaller recurring payments impacts short-term revenue. However, if the transition is executed correctly, it has the potential to significantly improve Nedap’s long-term numbers. I recommend revisiting the section titled "Insights from Transitioning to a Subscription-Based (SaaS) Model" for more details on this, and let me know if you still have questions afterwards!
I believe this also answers your second question regarding revenue and cash flow instability. With this transformation, Nedap is gradually achieving greater revenue stability because customers are moving away from large one-time purchases in favor of smaller recurring payments. When combined with high retention rates, this should lead to more stable revenues over time. My expectation is that Nedap will become less cyclical, resulting in increasingly predictable revenue streams.
Regarding the payout ratio, Nedap’s is close to 100% because the CEO prefers not to hold idle cash within the company, opting instead to return it to shareholders. Additionally, you should factor in the 5% dividend yield when considering the stock’s returns. That said, I hope that past performance is not indicative of future results and that Nedap’s transformation into a SaaS player will lead to a stronger stock price in the coming years!
Thanks again Ron, I'm really glad to have you reading the stuff I write :)
Thank you very much for the quick response, that's what I really thought it was because of
the transition to SaaS, the company looks interesting and has many advantages. I'm having a hard time with the high PayOut. What do you think of the management? Are there any questions about this?
And thank you very much again! I really enjoyed reading and I will read again.
Yes, fair enough. I don’t see the high payout ratio as a major negative. Sure, I’d prefer it if the company could reinvest at exceptionally high rates of return, like Dino Polska does. However, I appreciate that Nedap’s management is straightforward enough to acknowledge, “We can’t deploy this capital at highly attractive returns, so we’d rather return it to shareholders and let them reinvest it as they see fit.” That kind of honesty and discipline in capital allocation is something I really like actually.
Since Nedap’s business segments are no longer capital-intensive after transitioning from hardware to software, they simply don’t require large amounts of cash for reinvestment. CEO Wegman’s approach of not allowing excess cash to create complacency within the company—preventing teams from carelessly throwing cash against unattractive returns—is, in my view, a sign of responsible management. Ultimately, the high payout ratio reflects more of a disciplined approach I think. That said, management should lower the dividends for 2024 because of the declined profits. If that doesn't happen, it would be a red flag. I'll keep my eye on it! ;)
Thanks again Ron.
Thank you very much !!
Definitely interesting, keep up the good work.
Really enjoyed this deep dive! Thanks for sharing!
Thanks Rowan! :)
top Luuk! dank!
Ik doe het graag!