You are Priya Nandakumar, eleven days into the job as the first Chief Innovation Officer of Meridian Insights Group in Brisbane, Australia. Your largest client has just declined to renew because a free AI assistant is good enough. Before you spend a dollar of your A$12 million, you have to say what is actually fragile.
The situation
Meridian sells business information — subscription industry data, benchmarking reports and a research library across 28 sectors in Australia and New Zealand: A$96 million of revenue at an 18% operating margin (about A$17.3 million), with 540 staff. 74% of revenue, about A$71 million, comes from one line, the Sector Reports subscription, which renewed above 90% for most of three decades. Meridian has launched no material new revenue stream since 2014. Underneath sit 30 years of proprietary survey and client data that nobody else holds; on top, its analysts also collect, clean and write up public data.
On 3 March, a federal department that had bought Sector Reports every year since 1998 — A$4.1 million a year, Meridian's largest account — wrote that it would not renew: an AI research assistant now summarised the same public data "good enough". Renewal across the line fell from 92% to 86% in the latest quarter. Two more large clients, worth A$5.6 million together, have said they will pilot DataLive at renewal: a venture-backed rival with A$35 million raised that sells live analytics by API at about a third of Meridian's price. The planning team puts 68% of revenue in the direct path of that kind of substitution.
A February board paper modelled a 15% erosion of Sector Reports within 24 months — about A$10.7 million of revenue — which, because the analyst teams cost the same whether clients renew or not, would take about A$8.6 million of operating profit: half of it. The board wants a credible path to bring dependence on Sector Reports below 60% within 24 months and has ring-fenced A$12 million for it; if it is not convinced, it will sell the data assets while they still command a premium. Warren Coutts, who runs Sector Reports, argues that 86% renewal is still a franchise and that the money belongs in faster, deeper reports.