Overview

Black pearl group (BPG) recently listed on the ASX (Nov 2025) but since it is a secondary listing from the New Zealand stock exchange, there's history back to 2022. I have been tracking it on the NZX for a while but it's really only in FY25/26 that it became a little more interesting.

First, let me come clean with my motivation for researching it. It's mainly FOMO. I looked at other NZX -> ASX stocks like Xero, A2 Milk, Pushpay and Gentrack, before they multi-bagged, and although I eventually owned some of these, they are all fish that got away. So having admitted to not only missing these giants, but missing them after looking at them as minnows - take my thoughts with a sack of salt!

At first pass, the space BPG operates in is not the same level of quality as these other NZX success stories but the recent growth is striking.

BPG do SaaS in the marketing space, with most of their revenue from the United States and they have impressively grown Annual reoccurring revenue (ARR) like a staircase to 20m at the end of H1FY26. The question is does the growth cover it's sins?

Hungry for capital

It's clear they listed for access to capital (and to give US funders a way to exit). After listing on the NZX 2022, without an IPO, they have raised capital every year since. Most recently they raised ahead of their ASX listing in November and in August - raisings so close together that it's an orange flag for me. In particular, the November raise showed BPG were eager to take the brokers (Bell Potters) money (not open to regular shareholders) while diluting by more than 10%. 

ARR staircase

Strong growth to 19.5m ARR from 7.4m ARR at FY24 end. How did they achieve this impressive ARR growth? A mixture of their own products and acquisitions. They invested roughly 20m in their own platform some time ago and have built two products from this, Pearl driver being the biggest product. Pear driver has gone from near zero end of FY23 to more than 13m ARR at H1FY26 end. The most recent jump in revenue is due to the acquisition of B2B rocket.

Tech credentials

They have some ex-Xero and ex-US big tech staff that gives them tech credibility. Most of their products are about lead generation, that is, helping businesses find people to market to. I don't like this space. You are not only competing with ad tech products provided by the big tech ad sellers like Meta, Google, Microsoft, but also against spending that extra dollar on more ads, rather than leads. This type of business exists because customer acquisition costs have gone up so massively as big tech have flexed their pricing power.

Patchwork of products

My research into their products, showed that they are all real products that are providing value to their customers. Essentially, if you visit a customer's website and even if you don't login or enter any information they can still figure out who you are and push targeted ads to you. However, I think the main reason why all these products are working is this proprietary tracking data (combined with other datasets). Pearl diver was built in 45 days and exploded in revenue after they added a new unspecified data source. The crux of it is, BPG don't own this data source, they are buying it. Mitigating this is a fixed cost data supply agreement signed in H2FY25 for 3 years that should improve margins long term. There's also a small risk US privacy laws change and this tracking of people is more difficult. If the value actually comes from unique combinations of paid data sources with their own data sources that is more of a sustainable advantage.

OpenAI???

They recently compared themselves to OpenAI but for marketing. It's a stretch, they are essentially are feeding a LLM their leads data and have various products built off this. The bull case would be that they occupy a niche where unique data sets paired with inexpensive, off-the-shelf LLMs become a value-added product. I'm not yet convinced that someone else couldn't do the same or that their platform (Pearl engine) is a competitive advantage. 

A big tech suckerfish

The other aspect indicating concerning quality is their recent conference call comments on slowing growth in the December quarter. Slowing growth is fine, but they say that the cost of acquiring customer goes way up in the December quarter, that is, the cost of acquiring customers for a business that sells products to acquire customers itself is seasonal! This high customer acquisition cost for customers in a space where my guess is that the customers won't be sticky, just shows it's a tough business to be in and what great businesses Google, Meta, etc are. These high customer acquisition costs will show up in the margins rather than revenue numbers. One thing is for sure, I'd rather be in the business of clipping the ticket when people are donating at Churches (reference to pushpay, taken out and now delisted). 

Is growth efficient or expensive?

So gross margins are impressive at 68% (FY25) but I'm interested in operating margin and churn as that includes the marketing spend and its efficiency. In FY25, they were negative 6m operating cash flow, and negative 9m free cash flow (including capitalised development costs). H1FY26 was worse (see chart), but only slightly if you add back 8m in acquisition and listing costs. Revenue churn was 5.3%, down from a very high 9% in Q3 FY25. I also want to see that ARR actually hitting the books, revenue was only 8m in FY25. There may be surprises in the full audited accounts for FY26.

Overall, I don't see a sustainable moat in this business yet. The growing products are so new, in a few years who knows what product will be delivering most of their revenue. As @Solvetheriddle might say there's plenty of "development risk" and mines ahead!

The way forward - Rollup model

The acquisition of B2B rocket, shows a way forward for BPG to achieve it's 50m revenue target in 3-5 years. The rollup model, use the public market valuation to buy businesses in the private market at a lower valuation, then cut out costs, rinse and repeat. In my experience, this can work for a while and can deliver a great return for shareholders, but it relies on the public market keeping your multiple elevated. 

Management

Nick Lissette is a battler and the heart of the business. He's done very well to not only keep this business afloat over the years but achieve the ARR growth and get thousands of customers. Interestingly, he did step down for a short time from the CEO role but his highly qualified, ex-big tech, replacement was also big spend and was shuffled out quickly. My sense is the business has been run like a start-up. Some Aussie funds bought in to the latest raise and telling the story well will be key with this still capital hungry business. The acquisition of B2B rocket is an interesting test. It's a big exit for the young founders based in Canada, fortunately, they do have earn-out incentives. My concern is that it makes the business more complex by more than doubling staff in a different geography with inexperienced leaders. They are transitioning to a venture model with separate parts to the business which I'm cautious about.

Their presentations are filled with planets and outer space pictures. Since they are a marketing business with AI elements, there's a world where they become a hype stock. But that's not the waters I fish in. There's also a few orange flags in how they report that annoy me.

Conclusion

Given the cash burning, I predict more capital raises ahead in the future. You can't deny the amazing ARR growth, even if it is from a motley crew of products. I'm cautious about the roll-up model because without a high valuation the model breaks. My main concern is the choppy revenue mix behind the ARR climb and the intensity of marketing spend; ultimately, I’m not persuaded the business has built a real moat yet. I need evidence of operating leverage. I like the margins and growth but I want a higher margin of safety than 5x ARR to buy a loss making, low-moderate/uncertain quality business like this. 

Currently (at ASX listing), Black Pearl Group remains on my watch-list.