Pinned straw:
Just a note this used to be called Family Zone and has been around for nearly a decade. So not really a new company and Tim has been around the same amount of time.
Hi Strawman
Thanks for arranging the Qoria interview – was my first time tuning in to the company.
Obviously they have a good product and execution is going well – especially in the US market with some very strong growth (from zero to 20% of students in USA in past 4-5 years). Also like that its typically very sticky revenue once their in (interesting stats of winning 45-50% of pitches with schools once able to present their product, and retaining 85-90% I think once schools have adopted their product). In a competitive market I think that’s pretty impressive, and speaks to their products being comprehensive in function & liked by their customers.
Obviously approaching inflection point of cash flow breakeven soon (given strong CAGR in revenue), and they clearly have to continue investing reasonably heavily at this point to stay at the front of the pack in what’s reminiscent of the early Amazon / Tech giants digital real estate grab (i.e. become the go-to name in your key markets, and profitability can follow once your platform is in all these places). Always tricky trying to ascertain where operating profitability will settle once the market matures & aggressive product roll-out stage settles.
Anyway – while I like their product offering & growth rates – they are a tricky company to pin a value on (especially while we’re in the SaaS bloodbath & risk-off mode). It is worth noting even the merged entity is only forecast to hit cash-flow breakeven this financial year (FY26). So again – much of the company’s implied value depends heavily on where one thinks profitability will settle with time (and how much ongoing investment will be required to continue to drive their strong growth rates).
Some Rough Merger Maths
Having reflected on it I think the company’s share price will be dominated in the next few months by the Aura merger. Given Aura’s a private company – its not easy to get a MTM value on the company currently. However their last funding round 12 months ago (Aura scores $140M, boosting valuation to $1.6B | MobiHealthNews) valued them at US$1.6Bn (around $2.28-2.29Bn AUD at 70c FX rate) – and they valued Qoria at just under $1Bn AUD at 72c merger price. That said this has clearly been crunched (29c = $390M Mkt Cap) – and one has to assume Aura’s value will likewise have been dented if it was to go to market for new funding.
Combined business was touted/valued at Merger announcement at AUD$3Bn, with Qoria to make up 35% of post-merger issued capital, including some Aura shareholders precommitted to throwing in US$75 of additional funding for the newly merged entity.
Qoria shareholders to receive 1 new Aura CDI for every 17.2 QOR shares they hold – so at post—merger implies an AXQ (new listed Aura) shareprice of $4.99 or 40% of the merger-announced combined entity of $3Bn at a theoretical SP of A$12.38. Now while I’m sure the early figures included a fair bit of hot air & puff, I doubt they were inflated by 60%.
So on a quick layman’s pass – I do believe Qoria represents reasonable buying at these levels, but doubt the market will reflect this in the current SaaSpocalypse, and until the merger has taken place & first clean set of merged entity numbers provided. The cost-out figures you mentioned are probably the low-hanging fruit, provided they can be achieved without hurting the product or service.
I do think they are very much operating in a tech industry where eventually only the big will survive – so believe they’re making the right play consolidating to have the financial muscle & scale to pony up to the other big boys (by memory = Lightspeed Systems, High Speed Guardian, Bloxy, etc).
On my watchlist – will probably go shopping if they drop any further towards 25-27c will probably prove irresistible.
One to keep a quiet watch on.