OneMarket addresses its cash-burn at AGM, shares head north

Retail tech play OneMarket (ASX:OMN) held its annual general meeting in Sydney this morning, following an extended period of share price underperformance.

Investors obviously liked what the company had to say because shares reversed their southward direction, rallying as much as 21 per cent to an intra-day peak of 81c.

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The Westfield spinoff listed in May last year at $1.50 per share with $160m in the bank, but its largely been all downhill from there.

Established as a data-play to assist retail clients drive further engagement with customers, the company burned through cash early on, with little to show in the way of sustainable revenue generation.

2019 has seen a significant reduction in staff numbers and the loss of some major customers, including US retailing chain Nordstrom.

At this morning’s opening price of 67c, the company’s market capitalisation was just over $60m. That’s almost a 50 per cent discount to its cash reserves of $111.9m as of June 30 — an indication that investors are forecasting further cash losses to come.

But following today’s 9am meeting, OMN shares got a boost.

‘Strategic review’

As the company struggles for traction, some investors have called for the operating company to be transferred into a new structure and excess cash holdings returned to shareholders.

And in his address this morning, company chairman Steven Lowy said the board is undertaking a strategic review as part of efforts to “proactively manage the discount
to cash backing at which OneMarket trades”.

Lowy stopped well short of providing a definitive forecast, but added that a number of options were on the table and the company expected to inform the market about its finalised capital management decision by the end of September.

Following the staff cuts in February, OneMarket said it would now have enough cash to finance its operations until late-2021 — a 12-month extension from the previous forecast.

Company CEO Joe Polverari also addressed shareholders, providing details around OneMarket’s Customer Activation Platform — its core data analysis offering that will assist clients to “credibly and sustainably compete with the likes of Amazon and others”.

Despite the loss of Nordstrom, Polverari said OneMarket had picked up other retailers including Pandora and Marks & Spencer, with an additional pipeline of 75 potential customers.

“OneMarket is an early stage — but we think potentially game-changing — technology company, and we are still at the beginning of our journey,” he said.

In other ASX tech news today:

Cloud-based HR and payroll company Elmo Software (ASX:ELO) has announced a partnership with University of Technology Sydney (UTS) to develop an “AI-driven predictive analytics solution”. The company says it hopes to draw on UTS’ deep expertise in artificial intelligence to provide “HR and payroll professionals with a deeper understanding of their workforce”. Shares in ELO were up 1.47 per cent to $6.88.