After a disappointing start to life on the ASX boards on Tuesday, things are looking a lot more positive for the Felix Group Holdings Limited (ASX: FLX) share price today.
At one stage the construction-focused cloud-based enterprise software-as-a-service marketplace platform provider’s shares were up as much as 24% to 43.5 cents.
This compares to a decline of almost 3% for the Felix share price after completing its initial public offering (IPO) yesterday.
What is Felix?
Felix provides a cloud-based enterprise software-as-a-service marketplace platform for the commercial construction and related industries.
It connects contractors and their third-party vendors, automating and streamlining a range of critical procurement-related business processes.
According to its prospectus, the company launched its online Vendor Marketplace in 2013. Since then it has grown to become a leading marketplace for the Australian commercial construction sector, used by contractors to source vendors and vendors to source new business leads.
Felix’s enterprise customers include tier one Australian contractors and multinational commercial construction companies. Management also notes that the Felix platform is gaining traction in other sectors, with cornerstone customers secured in the government, utilities, mining and resources, and facilities management sectors.
As of the end of September, Felix’s enterprise customer base had grown to 39,398 vendors. Over 800 of these vendors are located in 42 countries outside Australia, Management advised that this has occurred organically as a result of contractors using Felix on international projects.
Due to the stickiness of the product, the company enjoys high retention rates for its recurring revenues.
Felix’s Chairman, Michael Bushby, explained: “Once adopted by Contractors, the Felix platform typically becomes a core part of and deeply embedded within a Contractor’s operations, making it difficult to replace. This has led to an approximate 99% retention rate for contracted ARR.”
In FY 2020 the company reported sales revenue of $3.7 million and a net loss of $7.2 million. This is still only a very small slice of a global total addressable market estimated to be worth $7.2 billion in 2020.
The Felix IPO.
On Tuesday the company’s shares landed on the ASX boards after raising $12 million at 36 cents per new share.
The proceeds from the IPO are going to be used to accelerate sector and geographic expansion, platform development, and the release of new modules.
With 131.6 million shares on issue, Felix’s market capitalisation now stands at approximately $57.2 million.
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Returns as of 6th October 2020
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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