Cash Flow Positive

After a monster Q3 this year, Roolife managed to beat the last quarter again, with 15% up in Q4 (preliminary).

I’ve listed the highlights from their announcements prior to the 4C we expect at the end of the month.

To me the biggest news from this is the cash flow positive news, which is a major turning point, and one they’ve achieved relatively early days.

This makes the numbers very healthy for the company. They now have north of $5M cash in the bank with their recent placement of $1.7M, they will likely end the year just shy of $10M in revenue, all with a market cap below $20M.

Healthy numbers like this combined with their recent growth rates, and consistent announcements of winning over contracts with great brands (most recent was Remedy: Australia's #1 Kombucha Brand), has been proving the thesis very nicely for now.

Disc - I hold.

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Highlights

• Accelerating product sales during the June quarter deliver a new Quarter record revenue of $3.9m (preliminary) for the 30 June 2021 Quarter – up 15% from Q3FY21

• Strong collection of cash receipts from customers of $5m+ for Q4FY21

• Company $1m+ cashflow positive for the Quarter

• Cash at bank at 30 June 2021 of $3.8m further strengthened with placement funds of $1.7m received in the first week of July 2021

ASX Announcement: 

30 March 2021

RLG revenue expected to be up 40% on prior guidance for Q3 FY21 from $2.5m to $3.5m 

Highlights

• Accelerating product sales during the March quarter expected to deliver revenue of $3.5m for the 3 months ending 31 March 2021 (preliminary & unaudited) 

• Strong result takes financial year-to-date revenue to $5.75m – already up 70% on FY20 ($3.4m), with 3 months remaining in the current financial year

Source:

https://newswire.iguana2.com/af5f4d73c1a54a33/rlg.asx/6A1026618/RLG_RLG_Q3_Revenue_up_40_on_guidance

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Great guidance update from Roolife. At the current pace it’s reasonable to believe this year’s result will be double last year’s revenue. Growth of 100% is always impressive and highly encouraging. For such a growth rate, the valuation remains very conservation at P/S below 3.  

As I mentioned in my last straw on them, they have $22M in contracts which remains more than their market cap. 

I remain bullish on Roolife, the demand for their focus target product ( beauty and wellness brands) continues to grow in China, and they’ve been executing well. 

I’m excited to see how they end the year. 

Tiny ecommerce experts that offer Australian (and global) businesses a path to reach and sell to Chinese consumers.

It’s easy to understand why brands would want to do it, the shear size of the Chinese markets means companies are eager for a piece of the pie. They mention in their latest presentation that China’s online shopping market is AUD$2.2 trillion with 925 million online shoppers. Mostly, their clients are B2C brands.

• Clean balance sheet and well cashed up: $5M in Cash, no debt.
• Steady revenue growth in past 3 years. The small size of the business means this growth is impressive in the, revenue went 3x from FY19 to FY20.
• Interesting to note they’ve secured $22M in contracts, which is more than their market cap. Of course, this isn’t guaranteed revenue given they will have to reach sales targets developed with clients, but gives us a good indication of the growth they could achieve with a few more years of good execution.

They’ve been building their stores mostly on platforms like Alibaba. They should not be valued like a pure software company, but the simplicity of their business model, and how well they appear to execute means I’ve taken a small position.