Lots of M&A activity at the moment with today's announcement by Proptech being notable for it being at a 131% premium to the previous share price. It looks pretty certain too with no due diligence or financing conditions and a $934,000 reciprocal break fee.

There aren't many positions I hold that I wouldn't give up for a 131% return.

[Not held]

1H results released after market close last night:

The good:

• Strong revenue growth
• Growth by both acquisition (59% of growth) and organically (41% of growth)
• ARPU grew by 23%
• Operating cashflow positive and this has been improving each half since H1 FY21

Not do much:

• Expenses growing significantly faster than revenue
• Results in slide into net loss (although note cashflow positive above)
• Doing a lot of acquisitions and is hard to tell whether they are loss making duds or adding material value

Overall:

Interesting business. Key selling point for me is quality of management, including the Chairman who is ex-CEO/MD of REA. I've been tempted by it a number of times but never gotten the conviction to mash the buy button. I haven't seen them give any sort of outlook or medium term targets and would feel a lot more comfortable if they shared some specifics of what this should look like in 3 years. It would also give us something to measure them against.

[Not held]

PTG issued a pretty positive update on Friday with the SP appreciating ~20% in response.

They are now FCF +ve and receipts are growing ~20% per quarter.

One of the reasons I haven't bought until now has been the limitations for further growth. They currently are the largest player in the ANZ market having increased their market share from 29 -41%. As such, they are unlikely to be able to grow by acquisition due to their size - they would get knocked back by the ACCC. Turnover in this kind of software is apparently low, so nice and sticky, but the chances of converting any new Real Estate agencies of any size is also low.

Pleasingly, they have managed to increase the ARPA (average revenue per agency) significantly - by 23% over the LTM. This is likely to have produced the positive re-rate: they have increased the number of modules and take up of new features is being demonstrated.

Other good stuff: $14.5m in the bank, headed up by ex-head of REA group with 10% shareholding, market leading provider of a niche SaaS service, good margins, rapidly increasing receipts.

And cheap at 3.2x ARR.

If they can continue to execute on their strategy then there should be a reasonable runway still to go. Not massive but a successful player in a small niche

not held