The healthy conversation on Pointerra got me thinking of other companies in the pain cave.

One such contender is Camplify, who just hit a new 52-week low today. The share price is down about 50% from its high in February.

The interesting thing here is that there’s really been no news flow in the last month when the bulk of the pain happened.

- The descending trajectory began when THL announced they were selling out. That whole blunder never made any sense to me. The CEO’s comments are outright strange: “Just over a year on from the merger with Apollo Tourism & Leisure we have reviewed our position on our Camplify shareholding and have decided to divest, given our focus on return on funds employed at THL and the fact that the shareholding is not currently delivering a return on funds.” What company invests in another company hoping for a return in 1 year? Are THL turning themselves into a fundie with a 12-month price target? The only true reason I can see them selling out is that they actually needed the cash, and were uncomfortable to say it directly.

- And speaking of the devil, just today THL goes on a trading halt, suggesting, “THL requests this trading halt to allow it to finalise its updated expectations for FY24 earnings and to provide updated guidance to the market, which is likely to be materially lower than its existing guidance.” Well, that’s a nice punch in the stomach for holders.

- It’s no surprise to me to think that investors are looking at THL as a proxy for what one could expect for Camplify. But the problem with doing this is that we have fundamentally two very different business models. One (THL) that’s extremely capital demanding. If you’re running a fleet you have to put up cash first to buy the thing and get that money back slowly over the years. If you’re Camplify, then you have to put out cash to get a hirer on to your platform. That’s money nonetheless but it’s much less of it, for a very quick payback too.

- Of course, Camplify is far from perfect. It’s continuing its journey to making acquisitions, and entering a questionable realm. The rent-a-tent acquisition to me is very questionable. They need to prove out this works very tangibly. Otherwise, I’ll keep thinking; why in hell did you do this?

- Also, investors are now hungry for free cash flow companies. Camplify has been dancing around this topic for a while, suggesting the mid-term goal would be to get there. But the cash hasn’t necessarily been gushing it just yet, and investors that have held it for 3 years (like me) may have lost patience now. Especially in a market where we’re seeing a lot of companies start to move.

-A marketplace company trading at less than 2x EV / Revenue could be an opportunity. Could be. The high take rate of Camplify should lead to very healthy margins. So there’s an opportunity for the brave investor to me a contrarian here and achieve a good outcome. For now, I’m not that brave investors, but I might become if this continues. 

In the end, I don’t really have a point to make for writing this. I’m really just processing my thoughts out loud here. Part of the events unfolding with Camplify make me think back to @Wini’s point about "When share price drives the narrative”. I was lucky enough to have lunch with Luke when he was thinking about writing of this topic, and this point resonated with me deeply, just like many of the other points he made that day. A smart guy he is.

@Rapstar did a good summary already. Publishing my rough notes as well.

Camplify got punched in the stomach today, with the stock ending down 16%. 

That’s on the back of revenue growth 95%, and a loss that’s slightly improve by 10% to $2.9M. 

Presumably, investors didn’t even look at the revenue growth number, went straight to the loss, and a the visceral reaction that unfolded caused an immediate trigger of the sell button. 

The growth needs to be put in context of Paul Camper’s acquisition, which has management pointed out, didn’t account for the whole period of the half year. 

If we want to be conservative, we can divide the growth by the share count increase to get to a growth per share number of 53%, I find that excellent. (@Rapstar how did you get to your 37% number?)

Growth per share of 53% with negative margins of 12% lands cleanly at 41% which beats my desired Rule of 40.

If your thesis was predicated on a profit inflection point, I understand your dissatisfaction and the rationale for selling.

My thesis revolves around a robust take rate indicating future healthy margins, sustained global scalability suggested by the growth rate, ample remaining market share to capture, all supported by strong execution. I remain confident in holding and affirming the trajectory of my thesis.

Since they report quarterly and consistently provide metrics, Camplify's full-year results didn't come as a surprise. I thought they were very strong. 

In my article for a rich life I explain how I get to organic growth estimates of 75%, that’s very strong given the bottom line improved as well. 

Thesis remains on track.

In the next year I’ll look out for:

1. Growth in European markets. Watch the growth in European markets closely, with particular emphasis on the UK. The successful integration of Camplify with Paul Camper within the next year is crucial; any setbacks in the UK market could potentially hinder the company's overall progress.
2. Growth in average booking value. Monitor the growth in the average booking value and Camplify's direct revenue generated from these bookings. This is the core of Camplify's business.
3. Marketing efficiency. Assess the efficiency of Camplify's marketing efforts. Management claims ongoing improvements based on experience and network effects, and it would be valuable to see tangible evidence of this in the coming 12 months.

Ref: 

https://www.goforgrowth.co/p/10-growers-in-fy23-part-1

I thought Camplify's results today were very strong.

They always lead with their GTV growth (109.87%), but I think that metric is too messy and I much prefer their revenue growth which came in at 63.8% versus Q2 FY22.

Now, this does take into account 1 month of contribution from Paul Camper, so I could do some back of the napkin map to pull out the organic growth, but I reckon the growth of their Australian business serves as a good proxy for that. And the growth there was 52.3% (pcp Q2 FY22). So we can see from this that the growth slowed down a little. Still, that level of growth is quite an achievement.

The next quarter will be a full contribution quarter from Paul Camper, which will hurt their take-rate, but improve revenue. Very keen to see what comes of that, also very keen to see the full story when they report on the half-yearly in a few weeks.

Big day for Camplify as they reported on Q1 and released their 4C. I’ve studied the company for a while and jumped in recently, so I thought I would post my thoughts here, knowing this company can be quite polarizing. 

Background

Have researched this company for a few months now. It first came on my radar about 1 year ago when we were searching for a van for a road trip up north (before the brutal lockdowns came up). At the time I remember thinking there was a good selection of vans on the website, that they looked very hipster and that they were a little expensive. A few months later I noticed Andy Crebar was quite bullish on the company which made me more interested in it. At the height of the hype cycle in December, Motley Fool recommended the stock. 

At that point my sentiment started to change, but I wanted to see a little more consistency from the team given the company hadn’t been listed for long. The compelling event here is the downturn we’ve seen affect small caps in the recent 3 months; Camplify lost nearly ~50% of its value from its peak (it traded at $4.4 in December), and today I purchased stocks for $2.60. I suspect the stock could lose ~10-15% given today’s hype is based on positive reporting from the latest 4C. It’s a bit of a newbie move to jump in on the day of an announcement, but given I aim to be in companies for at least for 5 years, I don’t mind a little premium. 

Bull Case

In Summary, I like this business because:

1. It’s building a network-effect platform. While it’s extremely difficult to do this right, and remain the network of choice, if executed well, then sky's the limit on how much cash flow could be generated in the future. 
2. The company has been executing well: all updates I’ve seen since listing have come in at revenue growth of >40%, many north of 60%. 
3. Their cash discipline and cash burn for such growth is better than I had initially expected; the most recent quarter was the highest at less than $2M cash burn; and with ~17$M in the bank; they can go for 2 years before profitability before tapping investors for more cash. It’s important here to monitor that they don’t start do increase cash burn to get the same levels of growth in the future. 
4. At this rate; they are well within the green for CAC/LTV. The way the company report is a good example of keeping shareholders in mind; they report on the important metrics clearly, which simplifies us having to do math behind the scenes to find out what’s what (although we must keep an eye on this given recent margins change with van sales). 
5. I back management; their CEO, Justin Hales story is legit. He speaks clearly, well, and seems to have a no-bullshit get it done attitude. His track record from founding the company in a startup incubator, to deliver consistent growth is what I like. One thing to watch out for here is for them not to become too promotional; this might be from demand, but recently it feels like he’s been on a number of podcast/shows; I prefer their execution to be telling the story. Justin owns 14% of the company and management an additional 6%; that kind of skin in the game is great to see.
6. Reviews of the product are very positive (although something that is worth keeping a close eye on in future). 

Risks and Bear Case

1. For Camplify to continue growing, it’s paramount they succeed in other geographies. In Europe; UK and Spain are growing exponentially now. But let’s remember they have super small comparisons (If you’ve had so little revenue in the prior quarter, we should probably not focus on % growth like the 900% they reported). In summary, those regions need to continue to grow. 
2. Check for growth in segments; recent growth has been great at Headline numbers (north of 100%), but that’s because they’ve started selling Vans on the website, which has super low margins (~12%). That’s nice but trivial. We need to see growth in the rental segment, if that starts to slow down; it’s a warning sign. 
3. Competitors; as we’ve seen in the case of other platform marketplaces (AirBnB, and Uber), competitors could come and start eating their lunch. I think if Camplify keeps their focus on the van owners (hard side of the network), they will remain the #1 choice; let’s watch out for that. 

Disc: I hold a small parcel.