2023FY Thoughts

Haven’tposted for while but have been watching Camplify’s progress like a hawk.

Just a fewcomments given the attractiveness of the current share price over recent times.

OperatingCashflow

It will beinteresting to see what the next 3 quarterly cashflow statements show.

They burnedthrough operating cashflow $3.5m for the full year to 31/3/2022. With current reportedcash (as of 31/3) sitting at $17.2m effectively there is 4.5 years plus worthsitting in the business.

Importantly,as time goes on you would expect this cash-burn becomes less and less eachrolling year. Because of the distortion from quarter to quarter due to whenCash is collected off the customers versus when payments are made to owners, it’sdifficult to tell the full cashflow picture from just 1 quarter. It gyrates toomuch. But from here on we’re going to start to be able to see what the annualizedOperating Cashflow is looking to like when compared to previous periods.

What has beenproviding a lot of sanity to me during this weakness in share price has beenknowing that Camplify is such ‘cash-lite’ business particularly when comparedto many other start-ups with similar growth potential. Just like any ‘marketplace’style business should be – and I think it’s already cemented its dominance inAustralia and NZ which will now be hard to dislodge – much like how difficultit would be for a new player to now compete with Carsales.com.au or Realestate.com.au/Domain.

The testingground of Australia and NZ to make further and further enhancements to process,software, apps and the owner/customer experience should see it make a strong pushfor some level of dominance in the UK and Spain as well. Its handy having a Founder/CEOthat is willing to get their hands dirty in the business and willing to embracefeedback from customers and van owners to make continual improvements. Alsonimble enough to see a problem such as Bushfires and Floods and innovatequickly come up with a win/win solution for the business and community.

In late2021, I recall Claude Walker (A Rich Life) ask the sensible question to JustinHales along the lines of ‘ do you think you will need to raise more cash toachieve operational profitability’? (paraphrased).

Theresponse from Justin was confident and clear – that the $11m approx. raised inthe Initial IPO is still on track to be enough to achieve their Growth plans.Apart from the opportunistic NZ acquisition which was issued in shares, you getthe feeling more and more each quarter that this is going to be the case.

I wasinitially expecting CHL not to hit positive cashflow until 3-4 years time (2025-2026FY)but I think is going to be brought forward much quicker because of a few things:

- Higherthan expected take rate.

- TheNZ acquisition at what seems to be a heavy discount to pre-Covid GTV for thisNZ Business and applying Camplify’s higher than expected take rate towards now30%.

- Surgein travel during this current Australian and NZ winter when this is meant to bethe quieter period for the Southern Hemisphere.

- Themaintaining of a ‘returning to normal’ in the UK and Australia despite Covidand Omicron still being around. In theory we should find that March 2022 toMarch 2023 will be the first time in a number of years where Camplify hasn’t hadit’s numbers impacted by lockdowns and travel restrictions.

The instantbooking feature also seems like a minor enhancement, but it should have a 2-prongedbenefit in a) increasing the conversion of bookings and b) lessening the needto tie up Camplify resources.

When youmagnify this across thousands of bookings and growing each year, it becomes material– just like the improvement in the Take Rate.

NZ Acquisition

Good to seethis being completed and the timing has worked well with the re-opening ofborders with NZ to the rest of the world.

The NZAcquisition of $7.37m (in shares) they’ve acquired at only 2.8x Revenue basedon the pre-covid 2019FY revenue of the acquired NZ business and an assumed takerate of 28%.

In factTranche 1 of the shares was issued at a price of around $3.48 per share (versuscurrent $2.04 share price).

That’s acheap acquisition IMO, especially considering that apart from the retainment ofsome Mighway/ShareACamper staff, the cost base largely stays the same.

Spain

Is someoneable to confirm the website traffic numbers to www.camplify.se?

It appearsthere has been a large leap in traffic to the site over the past few months– I hadMarch 22.6k, Apr 16.2k, May 57.4 and then June 107.6k.

Either whereI source my traffic numbers are wrong or something interesting is occurring intheir Spain business. The traffic in June was almost triple what the NZbusiness achieved. Just seems a bit of a large jump recently. To date I havelargely discounted Spain to be anything but a bonus – but happy to be provenwrong.

Again in theorya smart move into Spain – younger demographic and milder climate relative tothe UK which will hopefully extend the booking season in their NorthernHemisphere operations.

SharePrice Decline

As much asI like to ignore the share price noise when looking at any business, it’s beenhard to ignore. But in a positive way I have been accumulating more and more whilstit’s been in the low $2s and high $1’s of late.

An EnterpriseValue of $66m (assuming all options exercised) is just too good to pass up.

Disclaimer –My investment timeframe may be longer compared to others on here. Im viewingthis over 5 years +. My numbers are pointing towards a $500m-$600m plusEnterprise Value towards 2027FY or approx. $12-$15 share price (diluted withoptions exercised). - please do your own modelling and research on this.

You wouldexpect there to be periods of over-exuberance and periods of trading atmaterial discount to valuations along the way. Its not a straight line.

I’m stillof the opinion that this business is in the midst of the Fly-Wheel effect. Cantwait to see what the next 5 years delivers.