. For anyone that has done any research, Zoleo is a JV with gross profits split by specific territories. Beam's territories include Australia, New Zealand and Asia. Roadpost's territory is North America and the Rest of World (ROW) is split 50/50.
Beam expanded into NZ in August 2021 and will announce some retailers shortly. ASX announcement 6th August below
. China? This will grow the
. Zoleo's first market has been the consumer market but Beam is actively going after the Government and Enterprise market too, which is large and lucrative. In early August it made a big hire to drive growth in this market.
5. The satellite Personal Communications Device market is expected to expand by 29% per annum through to 2025This is an exceptional growth rate for any industry and with Beam expanding into new markets and verticals, it puts the Group in a strong position to capture some of that growth.
Effectively we have a fast growing business in a fast growing market.
6. There are multiple levers to improve value added services to boost ARPULike a typical telco, valuation is a function of subscriber growth and Average Revenue Per User (ARPU).
The holy grail is subscriber growth AND ARPU growth.
Beam with its Zoleo product is just scratching the surface with subscriber growth, but ARPU growth remains possible too.
There are 3 plans for Zoleo ranging from a low touch one to an all you can eat one.
Right now ARPU is $45 or $40.50 if you exclude GST but it is growing.
One reason why it is growing is that messages on the network are increasing rapidly. Given ARPU is low, it implies most plans are Basic or In Touch.
BUT, those plans only include access.
The message cost is higher. In Australia, it ranges from 65c to 50c. This will help to boost ARPU in addition to a host of other value added services Beam is working on. For my modelling, in another post, I model a static ARPU to be conservative.
An increase in ARPU MATERIALLY impacts the valuation.
7. Finally, Beam is a misunderstood stock.One of the reasons I share my research on Beam is that I believe it is a misunderstood and complex investment. I have a little bit of experience in this area and even I've been confused at times, which hasn't been helped by poor disclosure (note: this is improving).
In my experience, one way to making outsized returns is to find misunderstood or under the radar stocks as they lack a following and often have a discounted valuation. It often requires lots of patience but if you get it right and the company delivers, new investors arrive as re-rates occur. If it continues to grow it might get some broker coverage and if it passes, say $100m in market cap, instos will come on board, who will really bid up the price (note:
It's a reasonably tight register with the top 20 owning 60% of the company)
For now, while it is profitable, the financial results do not reflect the positive talk and what a few of us see. The reason for that is that Beam have been selling devices to the JV for which Beam earn a small margin. However, the JV then need to sell those devices to consumers. There is a lag between device sales and subscribers. Then there is another lag as airtime revenue is billed monthly, so it starts off small but as subscribers grow and churn stays low (note: churn is 1.5%), this compounds quickly. I'll explain and show this in more detail later...
So that's why I'm invested here and if you're new, why you should dig a bit deeper. I hope you've enjoyed the read. In the next post, I'll share some numbers and what that means from a valuation perspective. GLTAH
