IPO Watch: Fintech loyalty platform MyRewards chases global growth through partnerships, eyes December listing

The ASX will welcome its latest fintech entrant early next month, when customer loyalty platform MyRewards (ASX:MRI) joins the boards.

The company is looking to raise $5m from investors at 20c per share, as it eyes global markets for its digital rewards solution through a recent contract with international payments group Ria Money Transfer.

Brief history

Founded more than 20 years ago as a provider of discount coupons for retail shoppers, MRI incorporated a corporate client base through its 2009 investment in employee benefits platform Pegasus.

The combined group operated a steady business model through to 2015, at which point advancements in technology made “the market for loyalty rewards become more sophisticated”, chairman David Vinson said.

That same year, CEO Maitreyee Khire joined the company and became a major investor.

Speaking with Stockhead, Vinson said the last six years have demonstrated MRI’s capacity to stay agile in a changing tech landscape.

“That was the start of our evolution to becoming a tech-based loyalty reward company, with integrated systems built for adoption in line with the growth of ecommerce,” Vinson said.

Next steps

After buying 50% of Pegasus in 2009, MyRewards bought out the company in 2017 to vertically integrate its corporate client base.

The company serves a network of around 4,500 suppliers across sectors such as ecommerce, major grocery chains, hospitality, entertainment and travel.

Heading into 2022, its operational focus is on the launch of an integrated digital wallet to generate revenue from members’ in-store transactions.

In its prospectus, the company also flagged a recent contract with Ria Money Transfer which will facilitate the initial rollout of its customer rewards platform to six countries in the Ria network.

Based in California, Ria specialises in global money remittances with annual revenues of just over US$1bn.

Domestically, MRI also provides its employee rewards programs to a suite of large corporate clients such as Telstra and MLC, the company said.

In line with the changing tech landscape, Vinson said the company is also focused on building out its AI and machine learning capability via the data generated from ecommerce transactions.

“The whole idea is to be leading the charge in having a marketplace with a relevant and personalised experience for users,” Vinson said.

“So the company’s really focused on that tech underpinning where we’re going as an end-to-end provider of employee benefits, discounts and redemptions. And the next goal is to do that on a global basis through the links we’ve got with suppliers.”

Listing rationale

Discussing MyRewards’ push towards the ASX boards, Vinson said it marks a good opportunity to capitalise on steady growth in the broader rewards sector.

In that context, it will deploy capital to consolidate its footprint across online and physical retail channels.

“The last 18 months or so have been very beneficial to the online side of our business,” Vinson said.

“Although one way we’re differentiated is that we’ve built market share for two decades across thousands of in-store suppliers — hairdressers, cafes, health providers etc,” he said.

“I think the pandemic demonstrated the power of online models and in that sense it helped to heightened awareness of our style of business, but we’re also broader than that. We’ve got a fully integrated network and that in-store component is also a key part of what we do.”

Regarding MRI’s $5m raise, Vinson said the group isn’t looking for a large cash-flow injection – partly because it’s scaling the model with steady per-unit economics.

He also reckons the valuation is conservative, relative to fintech peers.

“If you look at recent listings in the space, they’ve generally gone out somewhere between 5x and 8x revenues,” he said.

“We’re going out at around 1.3x pro-forma revenues, so we think it’s a favourable valuation and we wanted to price it at a level that would look compelling to incoming investors – not just pre-IPO investors.”

Vinson said the company is also tracking towards EBIT breakeven as it taps new markets through the Ria partnership, after booking an underlying loss of -$1.195m in FY21 on revenues of $27.316m (FY20: -$1.521m, $27.059m).

“We’re not far off a breakeven position already, particularly relative to other companies where you see much bigger losses. So we’re very close to economies of scale on that global basis,” Vinson said.

Looking ahead, the focus is on expanding its customer base from current levels of 4.6m through Ria’s global 30m-strong customer base.

“We want to take the members we’ve got and look at how we can make them more active. Then when they are active, look at how we can increase sales and the margin on those sales,” Vinson said.

“Those developments in AI and data analysis are a key part of that, giving us insights into where we can promote more products.”

“So those operational goals are the key deliverables the management team will be focused on in 2022 post-listing.”

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