Mopoke Cloud - August 2021
Mopoke Cloud - August 2021
A mixed earnings season of COVID impacts and acquisitions for ASX tech. We look at the biggest winners and decliners, as well as some things we found interesting for specific companies.
The Mopoke Cloud Index - made up of 87 emerging technology leaders on the ASX - was up 5% in August.
This month’s rundown:
Camplify (+45%) reported it’s maiden results as a public company for FY21
Family Zone (+29%) is building a strong product portfolio and global scale
Envirosuite (+23%) continues to prove out scalability, riding the ESG wave
Dropsuite (-20%) surprised the market, but the outlook looks promising
Proptech (-18%) reported strong results, but needs to define a bigger market
First time here? Subscribe so you don’t miss further insights on ASX tech.
Top 10 Gains in August
Camplify (+45%) reported it’s maiden results as a public company for FY21
Camplify operates a Peer-to-Peer (P2P) marketplace for recreational vehicles in Australia and a few other markets
We wrote a piece on them last month - Camplify: Why the AirBnb for Caravans has a long way to run 🚐
We received good feedback on this content… so expect more deep dives in the future
What we like 👍
Growth: Outperformed their prospectus guidance and growing >100% across key metrics, and rapidly taking market share from traditional RV rentals companies
What we’re watching 👀
New initiatives: New product roll-outs and results from their newer European markets, as well as COVID-booking normalizations
Family Zone (+29%) is building a strong cyber safety product portfolio and global scale
Family Zone’s platform enables schools, parents and cyber safety educators to collaborate to keep children safe
In August, they announced the acquisition of Smoothwall, UK’s leading provider for $145m for 4.7x ARR
What we like 👍
Product suite expansion: A strong acquisition for Family Zone and appropriately recognized by the market (up 27% since announcement) as it not only expands geography and scale for Family Zone, but also product mix. Smoothwall’s ‘data & monitoring’ adds to a product suite that can land and expand with contracted school districts. While Family Zone is today a cyber safety company, they have the opportunity to become THE software platform for schools to shift completely digital. Objective Corporation (OCL.ASX) has executed on this strategy for government technology over the last 15 years and now offers over 50 products for governments on their path to digital transformation
Market tailwinds: ‘Monitoring’ (capturing kids browsing activity as it happens and flagging potential risks) is increasingly being pushed by the UK government and is a fast growing segment in the US - a key growth market for Family Zone with 56 million students (they currently have 5% of school districts contracted, who then roll it out to the schools and students)
Company Scale: combined business is now of material scale at $44m of ARR, a broad product suite and 9 million students on the platform across 18k schools in Australia, New Zealand, UK and the US
What we’re watching 👀
Growth efficiency: The business is growing organic revenues quickly ($3m last quarter), however burning a decent amount of cash for its size ($6m last quarter), showing a good (not great) burn multiple of 2x
Valuation: At a ~$500m valuation (11x ARR), the business is one of the higher valued companies of their cybersecurity peers in Mopoke Cloud Index on a revenue multiple basis, but inline with vertical software market leaders Pointerra, Altium and Objective
Envirosuite (+23%) continues to prove out scalability, showing renewed momentum and riding the ESG wave
Envirosuite provides a platform for environmental intelligence that help industry operators meet Environmental, Social and Governance (ESG) requirements
Earlier this year, the business changed CEO and with less than 12 months cash in the bank, completed a $14m capital raise at A$0.085 a share
Shares are up 100% since then as the business has regained momentum in new site roll-outs, posting stronger revenue growth and improving margins
What we like 👍
Improving gross margins: 44% in 2H FY21. The business is starting to look at lot more like a software business than it did just 18 months ago (when gross margins were at 26%)
What we’re watching 👀
Industry tailwinds: ESG is taking off in many markets and pressure is mounting for CEOs to act. The US Senate also passed a US$1 trillion infrastructure plan that includes US$97 billion of funding into Envirosuite’s key sectors
Top 10 Declines in August
Dropsuite (-20%) surprised the market with a capital raise, but the outlook looks promising if they can successfully introduce new products into their partner network
Dropsuite enables businesses to backup, recover and protect their important business information
Having recently become cash flow positive and a history for avoiding dilution (last raise was $3m in Feb 2020), the market was caught off guard by the $20m raise
What we like 👍
The Dropsuite business has many characteristics we like - loved product, a big market, strong and efficient growth and high insider ownership - however are today somewhat dependent on their partners network for their sales motion, which provides low cost acquisition but with less ownership of the end customer
In October 2018, fear become reality when one large partner from Latin America deactivated 420k paying users (approx $6m of ARR) who were deemed as ‘not actively utilising their email service’, sending the share price down 60% in one day (today they are at $11m of ARR)
That said, recent growth endurance in the business has been very strong - clocking up +70% annual ARR growth over the last six quarters, and they also continue to diversify their partner base
What we’re watching 👀
The new capital has been flagged to accelerate strategic growth objectives and advance M&A opportunities, and we’re hopeful that Dropsuite will become a multi-product organization in the near future
This is a big opportunity if they can plug a new product into their global network of 354 partners resellers to achieve similar efficient growth and reduce product/partner concentration risk
Proptech (-18%) reported strong results but needs to define a bigger market
Proptech provides a CRM for real estate agents with customers like Ray White and Raine and Horn
The company is one of 16 vertical software companies in the Mopoke Cloud Index - however outside of a few names, these businesses are not well loved by the market with low single-digit ARR multiples. In the US market, finding a growing, vertical software business at 3x ARR would be a steal.
What we like 👍
Execution: FY21 was a busy year for Proptech. Since re-listing in November 2020, they doubled their team from 51 to 103 people, made several acquisitions and extended their leading market share in Australia and New Zealand. No doubt the business has momentum.
What we’re watching 👀
Market size: Proptech’s current definition of market size is limited, with their core addressable market of real estate agency CRM being only $50m in Australia and New Zealand (12,200 agencies that could pay $5k a year for the software). At a 38% market share, they are currently framing themselves as a big fish in a small pond….
Pricing power: how can the business increase share of agency wallet over time as the market leader, and how they can use their market leadership to build into bigger adjacent markets. There definitely are options and expect its a high priority for their board, which is chaired by Simon Baker who previously led REA Group and owns 10% of the business
Interested in staying up to date?
We’d love your feedback so that the newsletter can continue to grow and improve. If you have a question or data set you’re interested in ASX tech - ask us here.
Last thing - we take care to ensure this content is accurate, however market data can be tricky and constantly changing so it's likely an unintended error or two slipped through – let us know here.