Firstly, I am by no means an expert on this technology. It actually took a while to get my head around it. However, based on what I have read this is a true first to market play. It’s the world’s first Financial Services platform that can provide financial advice to the mass market across a complete range of financial products - Savings, mortgage, insurance, retirement, straight investment and post retirement products.
It seems to be the only end-to-end solution that helps organisations manage every step, from finding new customers, to servicing them, through to execution and ongoing tracking. Do I have this right? Anyone have an easier and less gibberish overview than mine?
DSX also recently alerted the market to a report from Cerulli that has the Robo Market forecast at US$7.8 Trillion with Robo-advice platforms expected to reach US$489 billion in Assets Under Management by 2020. So there is no doubt this is shaping up to be big business.
It's also important to point out FinTech companies are achieving impressive valuations and getting acquired quickly. I like FinTech and MedTech (look at RAP's re-rating recently).
From my research over the weekend DSX seems to have had an interesting path. The stock went wild during the start of 2014 peaking at $0.32, but is now $0.08 even though the company has been smashing milestones under the radar. I can understand the sell down somewhat as nothing material eventuated until around October 2014. But from here the story starts to get interesting for me and i have no idea why the market cap is still so low.
October 2014
Decimal is appointed Technology Partner by WealthSure - WealthSure is one of Australia’s largest non-aligned dealer groups with 180+ advisers.
End of October
Decimal Appoints Macquarie Executive as CEO – Carolyn Colley joined to head the Australian and New Zealand business. She spent over 5 years in senior positions with Macquarie Bank, most recently as Executive Director Head of Personal Banking. Her LinkedIn profile reads like a wet dream. The head of Personal Banking at Macquarie does not just get up and go work for a micro cap ASX company on a whim. DSX must be very special to lure talent of this calibre.
November 2014
DSX was selected by QSuper to commence implementation of the Decimal software platform for scaled advice to members. QSuper has over 530,000 members investing $51 billion and is Australia's third largest fund.
December 2014
Decimal built a Partner Eco System with CLEAR Planning Solutions. CPlan assists Australian dealer groups and individual AFSL holders to deliver high quality financial advice through outsourced paraplanning and support solutions.
February 2015
Decimal established a wholly owned subsidiary, Decimal Software (US) Inc. based in San Francisco to support opportunities emerging in the US. This was actually done ahead of time, it seems the company made the decision to accelerate this effort based on interest from prospective clients and partners.
April 2015
Decimal enters partnership with leading US fintech company, Yodlee. The alliance will see Decimal’s technology platform offered by Yodlee into its extensive client base including major US institutions. Yodlee spans 15 countries, has a enterprise client base of over 800 organisations and in excess of 45 million users.
July 2015
Decimal enters partnership agreement with P&N Bank - Leading Western Australian financial institution. P&N said they will evaluate Decimal under a partnership framework with a view to commercial implementation of the platform. The bank serves more than 100,000 members with $3 billion in assets.
July 2015
Decimal Secures Commercial Services Contract with Centrepoint Alliance - one of Australia’s largest non-institutionally owned financial services organisations, and the country’s leading non-aligned financial planning and SME insurance premium funding company. The company has relationships with 1,500 advisers across Australia who provide financial planning and accounting services and collectively advise on an estimated $25bn of assets.
It just keeps going...
August 2015
Decimal Partners with leading ASX 200 Consumer Brand – This was a MOU with leading ASX 200 consumer brand with a reach of 10 million consumers across multiple channels and demographics. The only other information we know is it’s a trusted household name. The Company aims to complete initial consumer testing in 2015 in preparation for market launch in early 2016. (this will add heavily to the revenue base)
September 2015
Decimal Secures Funding from Strategic Investor - Technology investor Tony Grist looks to have lead the funding facility and also joined DSX as Strategic Adviser to the Board. Tony Grist is really Albion Capital Partners, a Perth based venture capital investment company. He is also the co-founder and former Chair of Amcom Telecommunications and a former Director of iiNet. He is now Deputy Chairman of Vocus Communications. You could not ask for a better backer or active investor.
November 2015
Decimal Appoints US Strategic Advisor - Silicon Valley based Growthpoint. Growthpoint will assist with strategic positioning in the booming “robo-advice” technology market as DSX puts it.
This honestly reads like a fairy tail. All these fundamental milestones have been achieved under the radar and meet with continues selling. I think DSX is at, or very close to the bottom and about to make a big reversal. I also think DSX’s quarterly was massively overlooked by the market among a few other ASX tech companies…
“Outstanding client success with over $1.85 billion advised on Decimal technology since launch”
“Online “robo” advice for enterprise clients exceeding $885million since June and growing at +50% per month”
50% growth per month…
So $885m worth of advice answered from June – September delivered DSX revenue of $248,000. It doesn’t take a genius to work out what 50% growth month on month will do to the following quarterly reports…
What I also find interesting is the massive restructure they have undertaken. The Company will see these cost savings from the December quarter onwards as a result of the completion of its first major deployment and organizational alignment to the enterprise market. From 2016 core operating costs are expected to be approximately50% or less than the cost incurred in the September 2015 quarter.
At the end of the quarter they had $982,000 cash + $1.7m R&D refund that was received in October. This gives them around $2.68m, which is enough to see them into 2016 with current burn. Take these cost savings into account + revenue scale up and the company might be ok capital wise. Even if they raise capital i think it will almost all go to Tony through some type of note.
Timing is everything and getting on a trade or investment when the company is shifting into that sweet commercialization phase is where the money is made. IMO now could be the time to buy DSX as a speculative punt - The graph below pretty much sums up my rationale here.
Not putting the house on it but i will add to my holding if things continue to look bright. It's not there yet but operational break even could be closer than we all think. Great company, hopefully it does well, no idea how big it could get but happy to take a punt.
DSX Price at posting:
8.6¢ Sentiment: Buy Disclosure: Held
