Ann: Market Update, page-71

Based on this current update and looking ahead at the circumstance surrounding the valuation of Jaxsta. Running through some scenarios can probably make us all feel a bit better.

Current
Based on an assumed freemium conversion of 3% to the paid Jaxsta Pro:
106,000 current Core members x 3% conversion x 94% retention rate x $49p.a. = $146k ARR
As additional features become live the value gap between Plus and Core will become wider and should accelerate conversions.
Say this is met in 3 years, assuming an upper 5% limit of conversion, and a 10% paid membership growth p.a. resulting in a greater retention rate of say 98%.

Forecast In 3 years
307,000 Core members x 5% conversion x 98% retention rate x $49p.a. = $739k ARR

API Deals Current

It was previously noted in a presentation slide that 20-30 API deals will result in a $1M ARR for Jaxsta. Loosely extrapolating, each API deal will be around $30k-$50k each. At current deals one we are roughly 5 deals x $30-$50k = $150k-$250k ARR

API Forecast in 3 yearsIn the over-bullish view that management can somehow win the lower limit of APIs in the next 3 years - 20 x $30-$50k = $0.6M-$1M ARR

Songtradr NR DealThe Series C funding at $30M value of the company at $165M, assuming a PS Ratio of 150 which is slightly higher than current Jaxsta PSR, the earnings will be around $1M. Assuming 10% of this revenue is NR x 20% Jaxsta revenue share = $20k ARR estimated
Negligible at this stage in forecasting as we dont really know what this looks like.

Share PriceBased on the current PSR of 130 the forecast SP in the next 3 years
$738k Plus ARR + $150k API ARR + $20k NR ARR = $908k ARR total Rev x 130 PSR = 31c SP
I think this is optimistically reasonable based on current trajectories of fundamental metrics. The worse we can get is probably somewhere between the SP now and this.

Cash BurnBased on the average estimated cash burn rate for the past 2 quarters at $1.5M/qtr, we will be definitely expecting a Capital Raise within FY21/22 Q2 or Q3. The value of which I strongly would guess to be around $5M which will dilute us a further 62.5M shares assuming an 0.8c SP - hoping management would announce some positive news on revenues and/or APIs which will shoot the SP to Songtradr deal levels. Another CR will definitely happen after this as well around FY22/23 which should propel Jaxsta to the inflexion point / cashflow positive.

CF+
Worst case scenario, management should see Jaxsta become cashflow positive around FY24/25. If larger API deals are obtained or there is significantly a greater conversion and retention rate of Core to Plus we should see assymetrical returns to play out and have a multi-bagger on our hands.

Fail
There is the possibility that none of this will work out but based on the amount of user testimonials of the paid product (see their Youtube vids) I think there is a niche market fit for this product.