Yahoo Finance
Filing
2. Management
Filing
Apr. 26, 2022
Dec. 31, 2021 Data
Dec. 31, 2021 Data
Price: $0.73. Shares: 115m, Cap: $86m.
1. Business
(1) History
(1) History
The company was founded in 1999 by Don Gray and his wife Debra Demeza. Originally it was a gift card system for business. Later it added a loyalty system. Both are aiming at the small business markets. Around 2009, it creates its own POS system which utilizes the tablet as a terminal. Through the years, it added payment, restaurant menu, ordering kiosk, kitchen display, online order, data analytics functions, etc. By 2020, it had reached around $50m in annual revenue and accumulated $15m in earnings after paying some dividends through the years (amount unknown).
In December 2021, it IPOed through a reverse merger and raised around $22m at $1/share. After that, it has 115m shares outstanding.
In Jan. 2022, it acquired Kalex Equipment Services for $2.5m($0.5m in shares). Kalex provides POS installation and maintenance services to around 15,000 client locations. It generates around $4.5m in annual revenue.
In Feb. 2022, it acquired U.S.-based company Loyalty Lane. Loyalty Lane is a digital coupon delivery company. It generates around US$4.5m in 2021.
(2) Major business
1) Gift card & Loyalty Card: These are their original business that still accounts for the majority of its revenue. It has been integrated into over 1000 different POS systems which are its major strength. 2) GiveX Pos system: It has been relatively new and faces tough competition. It is considered to be the new generation of Internet-enabled POS systems which is mainly aimed to replace the old standalone POS systems. The major advantage is that its Gift card, Royalty Card, and POS all share the same system which is much easier to use. It also has a unified version that will auto-update 4 times a year.
The company's revenue is very diversified with no customer accounting for over 2% of its revenue. It also has a very low churn rate of just 1%.
Its customers include chain restaurants, hotels, small retail, sports, etc. In Brazil, it partners with iFood to provide cash cards that can be used as a replacement for the debit card.
Currently, it has 113,000 client locations.
(3) Industry
The POS industry is very fragmented with billions in market size. There is plenty of room for the company to grow.
Competitors: Toast, Square, Lightspeed. They all provide new generation POS systems.
Don't know much about the Cash Card & Loyalty program provider.
(1) Management
CEO Don Gray: He is the founder from the beginning. He is an entrepreneur who dropped off college to start his own business. Although GiveX is his first company that went public.
(2) Ownership and compensation
Total shares outstanding is 115m. Before the IPO, the number of the total shares is around 90m. The total equity raised is just $3.6m. That indicated around just $4c/share average original share price.
Don Gray owns 37.7m shares through Krane & Company Inc.
Frank Toskan: 18.6m shares through Inter.Act Venture Fund Inc. He might be the founder of MAC Cosmetics which was a famous Canadian makeup brand that was later acquired by Estée Lauder.
3. Financial data
Notes:
Notes:
Notes: Debt and cash
As of Dec. 2021, $37m cash and $4.4m loan
Notes: Share data
Currently, it has 115m shares outstanding. 6.8m options at $1.0. 11m warrants at $1.25.
4. Valuation and comments
(1) Currently the company is trading at just around 1.5-time revenue despite it having over 30m in net cash which is quite cheap. On an EBITDA basis, it has been down lately but it should achieve a similar EBITDA margin pre-pandemic. Guided by the CEO, 2022's revenue should be around the $65m to $70m levels given the new acquisitions it made.
(1) Currently the company is trading at just around 1.5-time revenue despite it having over 30m in net cash which is quite cheap. On an EBITDA basis, it has been down lately but it should achieve a similar EBITDA margin pre-pandemic. Guided by the CEO, 2022's revenue should be around the $65m to $70m levels given the new acquisitions it made.
(2) I feel the major strength of the Company is its Gift Card and loyalty business while POS is still not a big part of the revenue yet. Its customers mainly are those smaller chain stores it makes more sense to create a cash card or loyalty program.
(3) The past two years had been really bad for a lot of restaurants and hotels. Yet the company still did fairly well with revenue growing by some. Very impressive.
(4) Things to watch: Revenue/Locations. Revenue composition. SG&A percentage.
5. Risk
(1) Don't know how the revenue for each segment (Gift Card, Loyalty, POS) is.
(1) Don't know how the revenue for each segment (Gift Card, Loyalty, POS) is.
(2) Don't know who are its major competitors in Gift Card and Loyalty programs.
(3) The competition in the POS business seems pretty tough. Although it is easy to tell that they all better than the old offline POS. Yet it is hard to tell how it is compared to its competitors.
(4) Although the company has existed for 20+ years, it is still a new IPO. There is limited information about the company.
6. Conclusion
Overall, the company is managed very well. It is a good growth company with a lot of potential. The current price is very acceptable.
7. Link
