Cashrewards is potentially listing on the ASX? Would you buy shares in them? Why or why not?
Also do you think it will change the Cashrewards business model for better or worse?
Article behind paywall fyi
https://www.afr.com/street-talk/retail-rewards-platform-cash…
Summary:
CRW is -50% from its IPO. It was a limp horse straight out of the gate. IPO investors should've dumped their bags on the first or second day to the FOMO, sit back, have a drink and wait for the price to bottom out at 0.334.
That's below price/book of cash on hand. If you can get it below 43c its below 1 PB
https://www.afr.com/rear-window/anz-bank-s-cashrewards-stake…
This article is mainly negative, but I wonder if this is a case of an IPO being overvalued and the article focussing on negatives and purely looking at the share price. Do you guys have any thoughts? Also, I want to see what proportion of Ozbargain users use Cashrewards?
Some notes:
Quarterly loss of $4.9 million
Cashrewards pay 60% of revenue back to users, $9 million was paid back to consumers from $15.1 million in cash receipts over the nine months to March 31.
Cashrewards spent $2.1 million on marketing over the quarter to acquire 68,319 new members on a rough customer acquisition cost of $31. I wonder how many were $20 referrals and how many were ads?
Just 246,105 users active out of 922,640 in H1 FY 2021. They only generated $5.9 million of profit or about $2 a month on average each over the quarter.
I believe in the Cashrewards business model, I believe it just has to scale to profitability. There are no listed peers to compare it to in the ASX and their business model is different to other businesses. Cashrewards noted quarterly cashflow does not reflect quarterly trading performance as revenue is recognised on transaction as opposed to cash being received at a later date (In my experience up to 3 months after travel for hotels and 3 months for Surfshark). So this may be a case of delayed cash from past transactions not coming in till next quarter. Cash receipts going up from $5.3 to 5.9 billion in March Quarter. Some positive points were revenue per active user and higher active users was quoted by a spokesperson.
The price/book is 1.84, with $33.7 million cash on hand for a $64.24 million market cap. If the share price deteriorates below 50c in the next few months with loss of major shareholders I would consider buying below 44c it would make a decent value play. However, that is if you believe they can become profitable in 3-4 years and slow quarterly losses as they have 1.75 years left of cash if they maintain this cash burn. This is not financial advice, just an observation.
Article in case its paywalled:
It’s been all downhill for investors in Cashrewards’ float, with the stock down 51 per cent from December’s $1.73 IPO price to 85¢ on Thursday.
Those left high and dry include Shayne Elliot’s ANZ Bank, which took a 19 per cent shareholding in Cashrewards for $26 million under the terms of the institutional offer, with it dusting $13 million of that on paper in six months. Whoops.
In the past, Elliot said he saw little value in the high-flying buy now, pay later sector, and criticised the models of other fintech start-ups. Still, ANZ backed Cashrewards, a digital coupon business that offers cash back to consumers on purchases.
Its latest quarterly report appears to have really put the skids under its valuation. It shows that Cashrewards spent $2.1 million on marketing over the quarter to acquire 68,319 new members on a rough customer acquisition cost of $31.
Summary in case its paywalled:
Its latest quarterly report appears to have really put the skids under its valuation. It shows that Cashrewards spent $2.1 million on marketing over the quarter to acquire 68,319 new members on a rough customer acquisition cost of $31.
However, its existing 989,587 members only generated $5.9 million of cash or about $2 a month on average each over the quarter.
The company has not disclosed how many of the 989,587 users were active over the March quarter, but disclosed just 246,105 were active out of 922,640 in H1 FY 2021.
The significant amount of inactive members does greatly boost average monthly revenue per active user, but you still need to allow for the the fact Cashrewards has to put a lot of its revenue straight back into the pockets of consumers. In fact $9 million was paid back to consumers from $15.1 million in cash receipts over the nine months to March 31.
Cashrewards said its latest quarterly cash report, which shows a loss of $4.9 million, didn’t accurately reflect trading performance due to cash receipt timing issues and a spokesperson suggested revenue per active user climbed year-on-year in the March quarter at the same time as active user numbers grew strongly. However, the exodus of investors means it follows the likes of Nuix and Adore Beauty as an IPO shocker.
The float was managed by Ord Minnett and Moelis, with Cashrewards founder Andrew Clarke selling $12 million worth of stock into the float, although he still retains 18.2 million shares. Alium Capital also sold 2.9 million shares in the float for $5 million, with the asset manager’s founder, Rajeev Gupta, joining the Cashrewards board in May 2019.
One silver lining is that Cashrewards still has $33.7 million cash on hand. Investors will hope for better days ahead.
Dont worry. Many users do not cashout at all, which will keep it afloat for many years.
I don't see how this model can scale to profitability.
It may be too conservative but assuming 5% profit margins, it would take 92 million in "actual" sales to the 1 million members to cover the 4.6million in salary. Last report had them at only 250k active members.
It doesn't help that it was listed at a time when all the high margin categories like travel were decimated. The margins I think will increase significantly when travel returns. It would need looking at how many active members are there just buying gift cards vs participating in the higher margin sales/cashboosts etc
Alternative revenue like monetising user data may already be coming in but the value proposition would be capped. I don't have numbers to back this up but it feels like due to Google's dominant position, every $ spent by companies at google may offer better "user insight" returns compared to paying Cashrewards a similar amount. You would also have a much wider audience as it may not include users of cashrewards. I am too blind to see much value in any data cashrewards members would provide to retailers, at a minimum it encompasses on average a more savvy shopper since they are aware of and are using cashrewards. That doesn't seem to work in the retailer or clients favour to try and generate more free revenue from the platform
Feels a bit like groupon/scoopon etc, a fad that comes around and takes off explosively, tapers off and finds a new state that's roughly 10% of it's heyday (in terms of customer usage)
insider trading alive and well on the ASX.
Cashrewards up from 72c to 93c on 1 July 2021 on no news. 2 July 2021 announces debit/credit card program with ANZ.
Yup, now back up to over $1… I had buy set at 67c. Oh well…
Don't stress too much, you'll make up for it with all the new offers that come out.
"Buy the rumor, sell the news". CRW will go back to <0.865 when the market starts taking profits. This business is a sinking ship even with free money from taxpayers.
Cash back company Cashrewards fell deeper into the red, as its net loss widened to $14 million from the year-earlier $4.5 million shortfall,
Cashrewards received almost $500,000 in JobKeeper subsidies and cashflow grants.
https://www.afr.com/companies/retail/universal-store-dusk-th…
Anything above 0.70 is overpriced.
Poor CRW still tumbling, unlike APT woot woot
remember APT is being bought by Square NYSE: SQ, at .375 SQ per APT share which currently puts it about $139 Australian
CRW up 18% today ($.975) with no news & overall market down 0.27%. Last time that happened on no announcements, ASX issued an Aware Query. Let's see if anything is announced tomorrow.
Sauces say that they just announced a partnership with WALMART.
Saw it dropping and managed to get in at 73c just before the rise…
Do you like losing money?