VMob-turned-Plexure optimistic after first profit

Tuesday 30th October 2018

Formerly shaky mobile engagement software company Plexure Group has reported its first profit, seen its share price jump from a low base, and says there are signs of more positive things to come.

Plexure saw revenue increase 51 percent for the six months ended Sept. 30, to $8.1 million, and net profit hit $1.1 million. This compares with an equivalent half-year loss of $195,000 in 2017.

Cash reserves increased from $2.4 million to $6.1 million.

The listed entity Plexure is the company-formerly-known-as-VMob, which had a chequered history. VMob emerged in 2012 from a number of reverse takeovers, originating strangely enough from a horse breeding outfit. The company designs and builds software allowing businesses - mainly retailers and fast food outlets - to target customers via their mobile phones.

VMob racked up a series of losses, became Plexure in 2016 and saw founder Scott Bradley replaced as CEO by former BNZ retail banking and marketing director Craig Herbison in September 2017.

Herbison told BusinessDesk the company suffered in the past from being early to market, focusing too broadly in terms of product and sales, and having a proposition that customers and the public didn’t necessarily understand.

He says there are actually lots of easy-to-grasp applications for his company’s software.

For example: McDonald’s customers in some overseas markets have a Plexure-built app which gives them loyalty offers through their smartphones. Others can order their Maccas online and have cooking start when their phone’s GPS tells the kitchen they are close by. Australian 7-Eleven fuel customers can lock in a weekly petrol price using a Plexure mobile app.

While interesting, investors haven’t until now been particularly convinced by the Plexure story, particularly as the company racked up million dollar losses.

Since listing in mid-2016, the company’s share price has never got over 35 cents and it hovered between 10 cents and 13 cents right through the latter part of 2017.

Today’s news saw the stock jump almost 23 percent to 19 cents, having traded at 13 cents a week ago. More than one million shares changed hands, the most in more than two years and a stark contrast to 90-day average of 54,000.

Herbison says his first goals when he took on the CEO role involved getting costs under control, becoming cash flow positive, and stashing money in the bank.

“We needed a stable company to get ready for next phase. We pulled away from some sales activities, and trimmed back on software engineering staff who were involved in building products that weren’t immediately being purchased by customers.

He says the company intends to remain profitable and won’t be looking to raise more capital for the time being. However, it will start using cash reserves to work on its core technology platform and on new products including: mobile wallets; messaging platforms - such as WhatsApp; chatbots - such as Alexa; smart speakers; and artificial intelligence.

“It’s up to the market to decide if they have confidence in the story we are articulating, particularly our vision out to 2020-2021.”

Herbison says the company isn’t giving financial guidance, but says Plexure is cheap compared with other listed tech companies. The company trades at a low price-sales ratio - it was just over one before today’s spike, compared to two, three or even four-times for some similar-stage stocks, he says.

“We are a small New Zealand company but with significant scale around our work - 85 million customers in 40 countries. We are in the black, have cash reserves to fund our own growth, and present good buying opportunities for people l wanting to invest in the sector.”

(BusinessDesk)

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