communication from FLX:
Hi xxxx
Apologies in the delay in getting back to you. We are flat out with the annual report and results presentation.
Thanks for reaching out and the kind words. Plenty more to do and you will be pleased to know we are laser focused on executing our strategic plan.
Before responding to each of the questions below, I wanted to let you know that we are providing a comprehensive refresher on the strategy and vision for Felix, accompanying our annual report results. I will have our Investor Relations consultants add you to our distribution list for the presentation. Also, I have attached our Prospectus. The document is comprehensive and provides clarity on a number of components and metrics of Felix.
Regards
Replies from FLX in italics to my questions
Hi there
Firstly, congratulations on the progress so far. It is great to see the vendor numbers increasing steadily.
I am a small shareholder in Felix and am trying to get some more colour around the business model and the metrics you report on. I would be most grateful if you could provide me with some more information to assist me with the following issues:
- What are the benefits that fall to a vendor becoming a paying subscriber?. As an extension of this question, how does Felix aim to monetise the increase in vendors, given the current low conversion rate.
The relationship between an enterprise contractor (e.g. CPB) and a vendor (e.g. Bill’s Bobcats Pty Ltd) is currently free for the vendor. The vendor will pay to be a part of the marketplace to receive leads from a range of contractors that they normally do not do business with.
Felix is currently developing features to complement the value proposition of leads. These are in the form of a pre-qualification wallet, saving time and managing data storage for vendors, and a pre-qualification passport – confirming to the market that a particular vendor is pre-qualified to a sufficient level, which will provide efficiencies on sourcing for the contractors while providing the vendors with the ability to work with a range of contractors.
One of my hopes is that Felix will develop "multiple ways to win”. As I understand it the platform is predominantly aimed at the construction/infrastructure and mining sectors. Do you see the current website being able to serve multiple different industry verticals, or will the back end remain basically the same and be re-skinned for different sectors. If it remains a single platform for an ever increasing number of industries, does the front end risk losing its focus, becoming messy, confused and bloated?
Felix’s current client base operate in the constructions, infrastructure, mining, local council, waste management and utilities sectors. The problem we are solving is evident in any industries with disparate supply chains, such as asset owners, REIT’s or large corporates entities.
Aconex co-founder, and current non-executive Director of Felix, Rob Phillpot has discussed a similar challenge Aconex faced in their early days. Rob has been instrumental in ensuring that the solution Felix provides for its clients doesn’t become too agnostic and is developed to the industry that it is being targeted. The challenge here is to not customise the software for customer specific business processes but to sell the benefits of adapting their processes to the software.
How do you see the procurement module as a driver for growth? An additional upsell to existing and future customers or as a standalone product able to compete in the digital procurement industry and a lead product in its own right. Do you have any projections?
The procurement schedule module is seen to be on par with our ‘sourcing’ module. Commercialising the procurement schedule module, along with the contracts module, Felix has a line of sight to lift its current ARPU from $62k p.a. to in excess of $100k p.a..
Regarding metrics
- Do you intend to report on industry standard metrics to allow adequate assessment of progress?
- specifically, CAC and months to recover CAC, LTV, gross margin, churn, net retention rate (dollar, not customer) and ARPU
- I would greatly appreciate any of the above that you could provide me with
We do track all standard metrics internally and some are featured in the Prospectus. The Enterprise module is early in its life cycle, and has experienced minimal churn since inception, which provides some distorted numbers. Compounding this Enterprise selling is lumpy by nature and the metrics such as CAC, can reflect this.
The Marketplace model is undergoing a transition to its future state business model and presenting the SaaS metrics through this time will hinder more than help investors.
We will be releasing various metrics in our annual report results presentation, in keeping with the listing rules, I can’t provide the figures until they are disclosed to the whole market.
Many thanks in advance for your reply. As an admirer and beneficiary of the t/o of Aconex, I wish you all at Felix the best of luck towards a similar trajectory. And as a resident of Kalinga, its great to see a local business make some headway and create the kind of jobs and industry we need for the future!
Please feel free to reach out for a chat or if you would like to come by our offices at Hendra for a tour, once some of the restrictions are lifted.