I think 40k users @ $6 is likely close to cashflow positive based on last years figures, they have a lot of depreciation expenses now, but that doesnt matter - cashflow is what matters for this business right now. That said, we dont really know the scaling costs.
In terms of cash from average daily balance, if they are able to link with a bank or access the overnight cash rate, that is $130k a year income (more when rates rise) for 25k users. I'd put that as a minimum, so its money, but its not a dealbreaker yet.
Advertising rates are decreasing accross all advertisers, this will include rent.com.au. With their growth it will probably be a wash - I wouldnt be expecting significant increase in their revenue this year, but hopefully a little more profitable. Advertising rates will help them on the other end with rentpay though.
Cashflow - Depreciation expense last year was $1m, I would assume that would be the same or more next year, so you can basically ignore that figure for the stage of the business. They have minimal borrowings, which is fantastic right now, but last year they had $3m in cash expenses excluding the share raise and you would assume that would be at least that much again and they only have $2.2m cash. So that origin deal really needs to take off soon, otherwise we are looking at another share dilution, which at this share price is going to hurt.
The interesting part about the web traffic is that Greg said a lot of customers are set and forget, and then we have the app. This web traffic growth is very important, because in one report they showed they conversion rate to be 1 in 7 (not including their stated increase with the new UI design), so if that number holds and 50% referals as stated then October should be looking at thousands more... but I dare say that isn't likely however great it would be. If it starts getting talked about in social circles though, with origin savings I could see a very quick upturn in users.
Very interested in hearing peoples thoughts on this company, so much potential and it really feels like its sitting on an edge of going either way right now.
RNT Price at posting:
3.1¢ Sentiment: Buy Disclosure: Held
