8CO Investment Thesis, page-2

Here's why I like their upcoming product CardHero, which essentially is a digital pre-paid fund disbursement card. This product is currently in trial with a large NDIS, which if given the go ahead, can potentially increase their ARR significantly capturing 0.5-1% of all transactions as revenue.

As COVID-19 accelerates the move to digital payments, there is a need for funding programs to continue for NDIS providers where Banks and ATMs access is not available. NDIS providers are often required the create multiple bank accounts for users, with little ability to monitor the disbursement usage and ability to use this information for reporting.

This will act in favour of the product acceptance rate and hopefully create some opportunities for 8CO. I can imagine if this NDIS provider we are currently trialling with is a big company, then the other providers may be interested and hence the interest. The market opportunity is 4.8Billion, which is huge.

Q3 FY20 recorded a 10% revenue growth vs pcp (pre-covid), while for Q4 FY20 has recorded a decrease of 11% on pcp (during-covid). Q3 2020 SaaS ARR was up 48% vs pcp, while Q4 FY20 was up 5% vs pcp. The reduction in revenue growth was due to challenging economic conditions represented for new integrations of the software. Although this occurred, it is evident that ARR continued to grow. With management stating that work in FY21 has started to return to normal, the core business breaking even, more federal government wins expected and the CardHero launch, this company has a huge upside to grow in my opinion.