@CanadianAussie Very insightful post, thank you for sharing. It’s so common to see people on Twitter post about their big winners, but posts like this where people share their learnings is one of the things that makes this forum great and will help us all grow as investors.
Hi Andrew
The PushPay closing price did not update on the portfolio page/s last night and again showing $1.73 after a close of $1.80 today. interestingly, if you go to Companies, the price has updated today. Suspect, may relate to the post share split adjustments.
RobW
Great write up from CanadianAussie. I'm watching this closely - thanks mate!
I was concerned about the 95% of the company revenue attributable to McD (Nov 2020 Investor presentation, p38). So i wanted to do a little digging. If anyone has any other commentary around the growth/details of the McDonalds contract i'd love to hear it!
(The progress with the Super Indo looks fantastic as well as recent agreement with White Castle but im currently looking at Plexure as if its only customer is McDonalds as this is where all the revenue is coming from.)
How can the company grow this revenue stream and what are the details of the agreement?
From the 2020 Annual Meeting chairmans address
'The Company’s operating revenue of $25.3 million does not directly correlate to user numbers. This is because approximately 95% of the Company’s operating revenue is linked to contracts that were signed in 2014 [the year of the agreement between Plexure and McDonalds Japan; first agreement with McDonalds Netherlands was in 2013] with pricing mainly based on store numbers'
With pricing based on store numbers, is there any commentary about planned openings in FY21? I can't find any...
Latest annual report shows McDonalds using Plexure's technology in 11,500 stores across 59 countries capturing 209 million customers. McDonalds currently operates in ~38,000 stores in 117 countries so there is a larger addressable market for Plexures tech in McDonalds worldwide.
In the 2019 Annual report p.5 the CEO wrote of the McDonalds partnership that there are 110 million end users on our platform in 49 countries worldwide. So in a year there are 10 more countries with almost double the amount of customers. Looking at the revenue growth YoY we can see this big jump which suggests there have been a significant number of new stores using Plexures technology. I guess the concern is that if McDonalds doesnt continue to use Plexures tech in new markets, revenue will stagnate.
The chairman addressed the revenue model by stating that:
'In 2019, this pricing model was changed with new customer contracts being based on digital adoption. This will mean that as consumer usage grows so too will the Company’s operating revenue'
Do you think the contract with McDonalds will be ammended? Does their equity stake in Plexure prevent this from happening?
Of importance i think is McDonalds purchase of Dynamic Yield last year for $300m. Dynamic Yield uses AI to personalise menus (intially drive through only) for customers based on what people are odering, time of day, weather etc but they are looking to move their tech into the global app.
The CEO Steve Easterbrook said in a 2019 investor call about Dynamic Yield:
'part of the investment we're making in the business with talent and expertise is to look how can we integrate that into the cell phone or kiosk and perhaps ultimately the global mobile app as well.'
Does this hurt Plexure? Or do the seperate agreements provide protection?
Pretty low-key debut this week from another promising dual-listed Kiwi company I've been stalking for a little while. Looks interesting on a number of fonts – taking a small position here and will look to add if management execute.