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#Launch In Indonesia
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Last edited 5 years ago

On 7th March RAIZ announced that they have launched into Indonesia. As a target market for financial products Indonesia seems like a funny first step for international expansion, but I can see why RAIZ think this is an attractive first stepping stone....

- It is the fourth most populous country in the world with a population of around 260 million and a median age of 28 (http://emerging-markets-research.hktdc.com/business-news/article/Asia/Indonesia-Market-Profile/mp/en/1/1X000000/1X00107T.htm). Note that the relatively young population is key to the RAIZ thematic of millenials using their product

- The RAIZ offering is inextricably linked with access to mobile phone technology. Currently in Indonesia 193 million people have a mobile phone (https://www.statista.com/statistics/274659/forecast-of-mobile-phone-users-in-indonesia/) and 50 million have a smart phone (https://www.pwc.com/id/en/publications/assets/financialservices/digital-banking-survey-2018-pwcid.pdf)

Looking forward to seeing more detail on how the Indonesian story unfolds.

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#Cashflow Positive
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Last edited 5 years ago

RAIZ released a pretty good quarterly today that highlighted a combination of strong revenue growth over the quarter as well as a reduction in costs.

The business operated in a cashflow positive manner for 2 out of the 3 months of the quarter and has highlighted continued expectations of revenue growth over coming quarters. Revenue growth has increased every quarter for the last 12, so there is no reason to assume that this will suddenly stop.

Also, unlike most growing tech companies, RAIZ has $9.4 million in cash and term deposits. Given the level of cash and the company either at, or on the cusp of break-even, it is unlikely that shareholders will see any dilution if things continue the way they are.

The following bode well for 2019:

  • They have secured the licence required to operate in Indonesia
  • They are increasing Life-Time Value (LTV) of customers
  • Their Superannuation product is in the lowest cost quartile
  • Poor sentiment towards conventional superannuation funds may provide a tailwind
#Bull Case
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Last edited 5 years ago

RAIZ, formerly called Acorns, is a fintech focussed on millenial investors and savers (would-be investors and savers...?!). It's best known proposition is to integrate with your bank account(s) so that whenever a purchase is made a "round-up" value is set aside for investment into one of RAIZ's six ETFs. What's good about their offering is that it is all structured around that piece of technology we can't do without; the phone!

More recently they have expanded their offering into superannuation, so that the aspiring cash strapped millenial can see all their vast wealth in the same place they spend the majority of their time; their i-phone screen!

It was massively overpriced at the IPO, listing at $1.80, which gave it a capitalisation of around ~$120 million (give or take a couple). Not surprisingly it has softened since listing. The funny thing is that millenials don't have much left over after spending all their wealth on their phones!

To be honest, I think this company and technology is better focussed on other demographics than western millenials. I think they recognise this too...they are currently expanding into Indonesia where the banking and finance sector is not particularly advanced...but everyone has a phone!

I don't think this will ever have a market cap of a billion but I think it has the potential to get back to a market cap of ~$100 million (maybe a share price of about $1.50) if the move to Indonesia goes well and if some more Australian millenials decide that they want to see their superannuation on their i-phone screens!