Half steps better than no steps for soon-to-be listed Plexure

11 November 2020

Originally posted on afr.com

Plexure chief executive Craig Herbison is confident investors will recognise that this years' growth rate is not reflective of the underlying business, as it taps markets to raise $34.7 million for a secondary listing on the ASX.

The company, already listed in New Zealand, has developed a mobile engagement platform used by brands such as McDonald's and 7-Eleven, which incorporates marketing personalisation, customer loyalty and mobile payment features.

On Wednesday the $NZ210 million ($198 million) company announced it would raise capital as part of a secondary ASX listing, $30 million of which would come from institutional investors and $NZ5 million from a placement to existing New Zealand-based retail investors.

The raising comes as a price of $1.13 per share, representing a 23 per cent discount to its last close and is being run by Bell Potter and Ord Minnett, who are fully underwriting the placement.

McDonald's, which owns 9.9 per cent of the business, has committed to buy into the raising to maintain its shareholding.

In addition to the listing news, Plexure announced first-half growth figures on Wednesday, revealing that revenue was up 23 per cent to $NZ14.4 million.

For the full year, it gave guidance of a 14 per cent growth rate to $NZ29.1 million in revenue - substantially slower than previous years when it has grown at more than 40 per cent year-on-year.

Speaking to The Australian Financial Review, Mr Herbison said new business was picking up in the second half (of its financial year to March 30), but due to the sales and deployment cycles of enterprise deals, it would not flow through until the 2022 financial year.

No backward steps

"We haven't taken a backward step in terms of revenue growth, just some half steps. This rate is pleasing in the current environment... and new sales are much more active now than they were. In the first six months people were displaced and working from home." he said.

"Full licence revenue doesn't hit until we're fully deployed. So thinking of front-book activity stalling, it's really just been pushed out by six months."

"Now what we're seeing is companies are trying to rebuild their volume in physical stores as the world opens up, or gets ready to live with COVID."

Founded in 2010, Plexure has staff in five countries and its platform is used by 210 million people in 60 countries.

The platform is designed to drive people in-store and sends more than 740 million push messages to consumers a month.

According to Plexure, quick service restaurants (QSR) that use its platform have experienced a 55 per cent increase in special offer redemptions and a 64 per cent jump in transactions from promotional campaigns.

Me Herbison, who was a director of retail banking for the Bank of New Zealand before taking on the top job at Plexure in September 2017, said the company had decided to pursue the secondary listing because it needed more funds to invest in its platform and hire more staff.

"This is a business that given the market size and opportunity, we'll be a $100 million revenue business at some point in the future and we have plans around that." he said.

"We have competitors already stepping over that mark... and we think there's more market growth than there are brands to service the opportunity, particularly in the mobile order and pay space."

Some of Plexure's main competitors include SessionM, which was acquired by Mastercard in 2019, and Segment.

Mr Herbison said Asia was its biggest market thanks to a large customer in Japan, but it hoped to push more into the US.

"There's a lot more opportunity in the US, which is a sophisticated market. Then in Europe, particularly in the QSR category.

"We'd also love to do more business closer to home in New Zealand and Australia. Talking to Coles and Woolies would be great, but we have to find the right moment to have the conversation."