A bit of info sent out by Armada Capital:
Good morning,
We have been fielding plenty of interest in our live IPO opportunity -
Scout Security Limited (ASX Code: SCT) – so we thought it would be worthwhile sharing some of the frequently asked questions from investors:
Investor FAQs
- What is Scout’s competitive advantage (I have seen plenty of these around)?
- Why the ASX?
- How much stock is escrowed?
- How do you justify a $15m EV?
- What newsflow can we expect?
- What is Scout’s competitive advantage (I have seen plenty of these around)?
Firstly, you have not seen anything like Scout. Investors often reference IoT devices such as Ring, Google Nest Cam, GE Lighting ect but while these have some elements of security or sensing technology,
they are not in themselves security systems. Scout has and is much more likely to partner with these types of products
Secondly, there are 4 major DIY security players in the US all vying for what is expected to be a US$1bn market in 2018 (SimpliSafe, iSmartAlarm, FrontPoint & of course Scout). All these players can be successful in this exponentially growing market
We strongly believe Scout can be the big dog of the pack because none of the others offer everything Scout does – an open and integrated system (Scout already boasts integration with Google Nest, Amazon Alexa products and Samsung Smarthings), its is design centric taking its lead from Apple and Nest that prove user experience, look and feel really drive uptake and its powerful modern technology
- Why the ASX?
Scout were sold the idea by another ASX-listed US-based company, the ASX is well known for its demand for early stage companies and Scout is well positioned to deliver on the high expectations of public markets. It was also a good fit given Australia is high up on their list for international expansion, and will be looking to bring its product here in 2018.
- How much stock is escrowed?
23,000,000 shares (22%) - 24 months from date of quotation
1,000,000 shares (1%) - 12 months from date of Issue
36,000,000 performance shares (100%) - 24 months from vesting date
21,000,000 options (100%) - 24 months from date of quotation
- How do you justify a $15m EV?
Simple. Revenue. Unlike so many other small-caps on the ASX, Scout’s product is deployed and earning substantial revenue
Scout is already turning over $US1.85 million (A$2.45m) annually — it has reached $US52,000 (A$68K) in recurring monthly revenue (RMR) at a 90% gross margin – a real value driver for the company
RMR has more than doubled in the past 12 months and more than tripled in the past 18 months. In the financial year ended 2016, Scout’s revenue grew 267% from the previous financial year (from US$691,976 in 2015 to US$1,853,956 in 2016)
We believe the EV represents a ~1.2x expected 1 year revenue (and that is based on very conservative estimates)
- What newsflow can we expect?
In short, the newsflow will be substantial and frequent. The company has committed to provide monthly updates on revenue and customer numbers
With a plan to spend 40% of the IPO raise (at least $2 million) on marketing and has in the past shown that $1 in marketing spend results in $5 of revenue, there will be plenty of news to get excited about
The other piece is around distribution partnerships – Scout is advanced in a number of discussions regarding additional potential distribution partners including bricks and mortar retail. Given theses guys are generally slow and hard to influence we have left them out of our forward revenue estimates. If one of these land (and we think it will), our expectations get blown out the water
We will also hear from Scout about new and exciting integrations, product upgrades and additional recurring revenue opportunities
(20min delay)