Astute observations young Jedi, I have been wrestling with that very issue, and wish you had of posted earlier!
Mitigating the above, is the fact the CEO is heavily invested, pays himself a moderate salary, and runs a very tight ship. (I think there is shades of TPG's Teoh there.)
You were smart to bail when you did from a value perspective, and possibly timing. I fortunately wasn't there at IPO, but got sucked in after using their X microchip. I think the product is brilliant, however got caught as I naively believed that their innovative business model of selling annual memberships and giving away data was sustainable.
How wrong I was.
Fortunately, they righted the ship in early 2017, and it has been brilliantly steady progress since then.
They will NOT go cash flow negative next quarter. The 4th CY Quarter is the biggest for travel $$, and this can be evidenced by looking at FRX's historical financial's as well as listed peer UNL.
Additionally, they have pre-sold a significant volume (10's of thousands) of X microchips to over 150 resellers and these resellers need to sell these chips and data, otherwise they are underwater. FRX have also signed multiple (significant in my opinion) distribution deals that have not been released to the market. Most of these can be found on investor.flexiroam.com
Amazingly, the most recent deal one is a deal with a large mobile phone chain in Russia that has 107 stores. (www.telefon.ru) FRX hasn't even bothered to release the deal onto their investor site, I found it on FB!!!
Russia has ~30m outbound travellers per year which is more than triple that of Australia, and they mostly travel to countries that wouldn't be friendly for roaming!
Furthermore, we are almost halfway through the quarter and AppAnnie is shows consistent, excellent performance in App downloads in ~50 countries in iOS and ~15-20 in Android.
They haven't yet cracked the US or China, but remember that this product is about international traveller numbers, not App store market size. Many developing countries have huge and rapidly growing outbound traveller numbers, combined with expensive incumbent telcos.
The above demonstrates the run-rate of NEW sales. The beauty of FRX isn't that they are on the cutting edge of technology, but they do have a recurring revenue product, something I'm sure you understand the value of.
FRX's new customers are onboarded (at little or no profit), as their product is still physically distributed. The real money is made on recurring purchases.
They have reached a scale whereby the recurring revenue rate can sustain the new users. (Something Afterpay has not yet done).
They are more efficiently converting subscribers to users, and as the business grows, the rates of growth are only slightly moderating. and we are still talking significant triple digit growth in both.
Importantly, user growth rates are being outstripped by revnue growth.
As for your 2.8c valuation, each to his own. I understand UNL is also undervalued and our closest peer. I view them differently, as they are washing through some issues similar to FRX was in 2017.
My valuation thesis is based around AYS. What would AYS be worth if they were growing at the rates FRX are, in a market that was significantly larger and that was significantly diversified?
FRX Price at posting:
5.6¢ Sentiment: Buy Disclosure: Held
