MyDeal.com.au Pty Ltd (ASX: MYD) updated the market with record November sales and an expanding private label business on Thursday. The MyDeal share price opened 3% higher on the news, but has been unable to hold onto its gains. At the time of writing, MyDeal shares are down 1.53% to $1.29. 

What is MyDeal?

MyDeal is a pure-play e-commerce business with an online retail marketplace specialising in household goods. According to the company, it offers consumers a vast product range from independent sellers at competitive prices. MyDeal recently raised $40 million from its initial public offering (IPO) at an offer price of $1.00 per share. 

The MyDeal share price went as high as $2.20 on its first day of listing. However, its shares have drifted lower in recent weeks to their current $1.29 level. 

Trading update with record performance 

November was a record trading period for MyDeal with gross sales of $30 million, up 192% year on year and 63% month on month. The company’s active customers grew to a record 778,867, up 236% YoY. Furthermore, 52.9% of all transactions were from returning customers, up from 49.7% in the first quarter of FY21.

The business delivered gross sales of $105 million for the first five months of FY21, which exceeds gross sales for the entirety of FY20 ($103 million). 

Private label business to drive margin expansion 

MyDeal’s private label business, Duke Living, also achieved significant sales growth of 71% month on month, or $1.2 million, in November. The company’s private label business sources products from manufacturers and/or wholesalers and sells them directly on the MyDeal marketplace as well as other marketplaces. 

MyDeal founder and managing director, Sean Senvirtne, believes that the higher margin private label is in its infancy with under 200 products as at today’s date. He expects Duke Living to grow as it rapidly expands its product range. Expanding its private label product offering and sales is expected to deliver higher margins for the greater business while offering competitive prices for customers. 

Australia enters ‘COVID-normal’ 

The announcement highlighted Australia entering a period of ‘COVID-normal’, with easing of social distancing and lockdown restrictions. Despite these changes, MyDeal is continuing to see strong website traffic from all states and territories. The company’s website visits from Victoria and the rest of Australia were up 174% and 168% respectively in November 2020 compared to March 2020. 

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Telix Pharmaceuticals Ltd (ASX: TLX) share price is racing higher after the company announced a new phase in its drug trials. The company confirmed it will proceed with the Phase III of ProstACT study for its TLX591 drug, a prostate cancer treatment.

The company also advised this morning that it has entered into a commercialisation and partnership agreement with DuChemBio, a leading South Korean radiopharmaceutical company.

At the time of writing, the Telix share price has surged up 5% to $4.20.

About the Phase III testing

Telix recently met with the United States Food and Drug Administration (FDA) to discuss the company’s planned Phase III ProstACT trial for TLX591. Today’s announcement is the result of that meeting.

The company advised the Phase III clinical testing will involve patients with metastatic castration-resistant prostate cancer (mCRPC), and who have disease progression following prior treatment with a novel androgen axis drug (NAAD).  Based on the statistical plan presented to the FDA, this study will enroll approximately 390 patients and will start in Australia.

Telix is the process of submitting a clinical trial notification to the Australian Therapeutic Goods Administration (TGA).

The company says Australian and European sites will be added progressively during the first quarter of 2021 and, and it will also evaluate the feasibility of enrolling Chinese patients, subject to regulator consultations and requisite approval.

Telix chief medical officer, Dr Colin Hayward noted:

The valuable feedback Telix has received from our November meeting with the FDA has helped Telix to finalise the clinical development roadmap for TLX591 with respect to inclusion of US patients in ProstACT.

We appreciate the FDA’s clear guidance and feedback on our proposed study, particularly the opportunity to deploy a far more compact study design.

We expect the study will require a significantly reduced recruitment time, due to both the reduced sample size and the patient-centric randomisation scheme. We look forward to working with the agency to bring TLX591 to American patients living with metastatic prostate cancer.

Partnership with Korean company

Telix and DuChemBio also announced today the founding of the Korean Partnership for Advanced Prostate Cancer Imaging in Melbourne and Seoul.

In this partnership, Telix has granted exclusive rights to DuChemBio to commercialise TLX591-CDx for prostate cancer imaging in South Korea.

The parties will cooperate to attain a marketing authorisation for the product from the Korean Ministry of Food and Drug Safety.

Commenting on the deal, Telix CEO Christian Behrenbruch stated:

Telix’s mission is to be a leading global oncology company and South Korea is a key Asian market for our products.

We are pleased to have entered this commercialisation and partnership agreement with DuChemBio to bring this highly anticipated product to Korean men with prostate cancer.

DuChemBio has a well-deserved reputation as the number one radiopharmaceutical company in Korea and we look forward to exploring future commercial and clinical opportunities through the experience of this initial partnership.

How did the Telix share price perform in 2020

The Telix share price has gained almost 170% this year, as new developments in its various medical drugs took place. At the current share price, the company commands a market value of $1.1 billion.

More reading

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• Telix (ASX:TLX) share price storms 8% higher to record high on acquisition news
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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Macquarie Group Ltd (ASX: MQG) share price has been left behind in today’s rally after it announced a US$1.7 billion ($2.3 billion) acquisition.

Shares in the investment bank slipped 0.6% in morning trade to $137.58 when the S&P/ASX 200 Index (Index:^AXJO) jumped 0.4%.

It isn’t a great day for financials with many in the sector also nursing losses. But many are faring better than the MQG share price.

The National Australia Bank Ltd. (ASX: NAB) share price gained 0.2% to $23.05 and even the crisis-ladened AMP Ltd (ASX: AMP) managed to rise 0.1% to $1.77.

Macquarie share price under M&A spotlight

Investors don’t seem too taken with news that Macquarie will purchase Waddell & Reed Financial, Inc. (NYSE: WDR).

Waddell & Reed is one of the oldest asset and wealth management companies in the US with two divisions. The first is an asset management business that manages around US$68 billion. The other is a wealth management division with US$63 billion in assets under administration.

If Macquarie is successful in the takeover, it will flog the wealth management business to LPL Financial Holdings Inc (NASDAQ: LPLA) for US$300 million plus excess net assets.

New partnership and US$68bn AUM boost

LPL is described as a leading retail investment advisory firm in the US and Macquarie will enter into agreement that will position the Australian bank as LPL’s “top-tier strategic asset management partners”.

Waddell & Reed’s asset management business will boost Macquarie’s assets under management (AUM) to US$465 billion.

“The combined business becoming a top 25 actively managed, long-term, open-ended US mutual fund manager by assets under management, with the scale and diversification to competitively position the business to maintain and extend its high standards of service to clients and partners,” said Macquarie in its ASX statement.

Is the MQG share price a buy?

The deal is likely to be consummated by mid-2021 as it has the backing of the target’s board, although it’s still subject to regulatory approval.

The Waddell & Reed share price surged 48% to over US$25 in afterhours trading on the New York Stock Exchange.

It’s not surprising to see the share price of the bidder fall and the target surge. This is typically because mergers and acquisitions (M&A) tend to leave the target’s shareholders better off than those of the bidder.

However, Macquarie has a good track record and any weakness on the news may not persist – especially when things are looking up for this year’s Santa Rally.

More reading

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Motley Fool contributor Brendon Lau owns shares of AMP Limited, Macquarie Group Limited, and National Australia Bank Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Amaero International Ltd (ASX: 3DA) share price will be one to watch when it resumes trading after the company announced it received a purchase order from the world’s largest aerospace manufacturer, Boeing Co (NYSE: BA). The order is for the manufacture of metal evaluation parts.

The company provided an update on the order this morning after which the Amaero share price was placed in a trading halt. The trading halt was requested in relation to a potential capital raising. 

About Amaero 

Amaero made its ASX debut on 6 December 2019 at an initial public offering (IPO) offer price of 20 cents per share. The company uses additive manufacturing processes, otherwise known as 3D printing, to produce components out of various metal alloys. Its clients are predominantly in the defence and aerospace industries.

Amaero is Australia’s largest metal 3D printing company by volume of 3D printers. Currently, six out of the top ten defence companies in the world are Amaero clients. 

The company’s growth strategy is to focus on immediately addressable commercial opportunities whilst still providing growth optionality. It aims to assist defence and aerospace clients in preparing for future military and aviation platforms utilising Amaero’s proprietary metal 3D printing processes and alloys. The company says its products provide improved performance and decreased weight whilst delivering mechanical enhancements not achievable via traditional manufacturing methods.

Amaero share price performance 

The Amaero share price has rocketed more than 300% since its IPO to a closing price of 65 cents on Wednesday. The company has made a series of significant achievements since listing including: 

• Tooling agreement with Fletcher Insulation, Australia’s leading insulation company, for the development of an additive manufacturing application, to provide a superior tooling solution to Fletcher and its global manufacturing network. 
• Development agreement with top 10 global automotive manufacturer for metal 3D printing of tooling. 
• Commencement of qualification statement of work for the world’s largest aerospace manufacturer. 
• International patent application in final stage for its high performance titanium alloy. 

The company had $4 million in cash and cash equivalents as at 30 June and believes it can become cash flow positive by 2023.

Boeing purchase order for evaluation parts 

Boeing is the world’s largest aerospace company and leading manufacturer of commercial jetliners. It also produces defence, space and security systems which support airlines and government customers in more than 150 countries. Its products and tailored services include commercial and military aircraft, satellites, weapons, electronic and defence systems, launch systems, advanced information and communication systems, and performance-based logistics and training. 

The evaluation parts for Boeing will be developed and manufactured at Amaero’s facilities in California and Melbourne. 

More reading

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Sezzle Inc (ASX: SZL) share price is pushing higher this morning following the release of a trading update.

At the time of writing, the buy now pay later provider’s shares are up 1.5% to $6.38.

How is Sezzle performing?

Just like we have seen with Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) this week, the month of November was a strong one for Sezzle.

According to the release, November represented the highest monthly underlying merchant sales (UMS) performance since the company’s inception.

Sezzle reported UMS of US$113 million for the month, which represents an increase of 188.5% compared to the prior corresponding period.

This means that the company is now operating with annualised UMS of US$1.36 billion, which is well ahead of its target of achieving annualised UMS of US$1 billion in FY 2020.

What were the drivers of its record-breaking month?

Key drivers of this growth were another large increase in active customers, strong merchant growth, and a very positive performance during Black Friday and Cyber Monday.

Management advised that active customers surpassed the 2 million mark for the first time in November. This means it has added over 1 million active customers since February.

Its launch into Canada has given this metric a boost. Management notes that the business is performing strongly in the country and producing faster UMS growth rates than the United States.

It was a similar story for merchants, with active merchants reaching 24,846 at the end of the month. This is a 164.5% increase year on year.

In respect to its Black Friday and Cyber Monday performance, management advised that it recorded UMS of US$28.5 million for the four-day period. This was a 146.4% increase on the same period last year.

It also revealed that Black Friday 2020 represented the single largest day of underlying merchant sales and transactions from active customers in the company’s history.

Sezzle’s CEO and Executive Chairman, Charlie Youakim, was very pleased with the month.

He commented: “We set new records over the month of November and the BFCM weekend, with UMS reaching a run-rate of US$1.36 billion (188.5% YoY growth), Active Consumers growing to over 2 million (151.5% YoY growth, and Active Merchants now exceeding over 24,800 (164.5% YoY growth). Our November UMS run-rate of US$1.36 billion is well ahead of our previous guidance of exceeding a UMS run-rate of US$1.0 billion by the end of 2020.”

“In addition to our record setting performance in November and over the BFCM weekend, we are extremely excited about the direction of our business, as we recently partnered with GameStop and eCommerce platform Wix. Sezzle is now offered at GameStop’s network of more than 3,300 U.S. retail stores, its online store, and in the GameStop mobile app. Our integration on Wix is available to all Wix merchants in the United States, Canada, India and in the future will be available in other regions as Sezzle expands internationally,” he concluded.

More reading

• Why the Afterpay (ASX:APT) share price continues to dominate
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• Afterpay (ASX:APT) share price under pressure by US BNPL giant
• Is the Sezzle (ASX:SZL) share price a buy?
• Is buy now, pay later (BNPL) giving Aussies a headache?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The BrainChip Holdings Ltd (ASX: BRN) share price has been a strong performer on Thursday.

In morning trade the artificial intelligence technology company’s shares are up 8% to 37.3 cents.

Why is the BrainChip share price zooming higher?

Investors have been buying the company’s shares this morning after it provided an update on the development of its Akida Neuromorphic System-on-Chip. (NSoC).

According to the release, BrainChip confirms that the Register-Transfer Level (RTL) design has been completed and transferred to its manufacturing partner, Socionext America.

Socionext America will now complete the physical design of the device and all related engineering tasks required. After which, it will transfer the full device files to Taiwan Semiconductor Manufacturing Company (TSMC) for mask creation and wafer fabrication.

Following this, the mask set will be utilised to manufacture production wafers as well as support qualification testing and parametric testing of the Akida device.

“A major milestone”.

BrainChip’s CEO, Louis DiNardo, believes this is a major milestone for the company.

He commented: “The Akida device design will be transferred to TSMC for use in manufacturing production wafers in support of potential customer requirement in 2021 and beyond. This is a major milestone for the Company as we move to commercialize the Akida NSoC.”

“Our chosen markets in Smart Home, Smart Transportation, Smart Medical and Smart City include some of the most discriminating customers in the electronics industry. Through our partnership with SNA [Socionext America] and TSMC we have world-class resources and expect to have a robust Integrated Circuit (IC) that suits their requirements for both performance and reliability,” he added.

What is Akida?

The company believes that Akida brings artificial intelligence to “the edge” in a way that existing technologies are not capable.

In respect to artificial intelligence, the edge is where algorithms are processed locally on a hardware device, without requiring any connection.

Management claims Akida has a high-performance, small, ultra-low power, and enables a wide array of edge capabilities.

This includes its use in applications such as Smart Home, Smart Health, Smart City and Smart Transportation. The company explained that these applications “include but are not limited to home automation and remote controls, industrial IoT, robotics, security cameras, sensors, unmanned aircraft, autonomous vehicles, medical instruments, object detection, sound detection, odor and taste detection, gesture control and cybersecurity.”

More reading

• Will the Afterpay (ASX:APT) share price hit new highs?
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• Kogan (ASX:KGN) share price storms higher on $122m Mighty Ape acquisition
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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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Like the Energizer Bunny, the Afterpay Ltd (ASX: APT) share price just keeps going and going… higher and higher.

The company’s shares hit an all-time closing high of $104.53 per share on 9 November. Since then, the Afterpay share price has slipped 6.75% to $97.47 at the time of writing. Still, that represents a phenomenal 218% gain year to date.

By comparison the broader S&P/ASX 200 Index (ASX: XJO) is down 0.98% so far in 2020.

With such a stellar performance already in hand for the year, can the Afterpay share price keep going and going?

Based on the company’s latest announcement, it certainly seems possible. The update, released after the market closed yesterday, revealed a new sales milestone for the month of November.

What did Afterpay announce?

Afterpay revealed in a market update last night that its global underlying sales in November reached $2.1 billion. That’s up 112% from the $1 billion reported in November 2019.

Buy now, pay later (BNPL) sales were buoyed by big spending across the Black Friday and Cyber Monday weekend.

The company reported that its United States market reached the highest level of monthly underlying sales ever across all the regions it covers. US consumers purchased $1 billion of goods and services on the company’s BNPL platform.

With sales in the US growing 186% year on year, November marked the first month that underlying sales in the US were more than the ANZ region. ANZ spending came in at $900 million, up 54% from November 2019, and also setting a new record for the region.

In fact, Afterpay reported that every region it operates in recorded new monthly underlying sales records in November.

The company’s United Kingdom market saw the fastest growth, with November’s $200 million in underlying sales 315% higher year on year. The number of UK merchants on its platform also leapt 800% over the year.

What does Afterpay do?

Afterpay is a leader in the BNPL space. The company’s payment platform allows people to buy and receive goods and spread the cost of their purchase out over equal payments, without any interest fees.

The company was founded in 2015. The Afterpay share price first began trading on the ASX in June 2017. The company now operates in Australia, the US and the UK, with current expansion plans into the wider European market.

With November’s strong sales growth figures in mind, it will be interesting to see how the Afterpay share price performs moving forward.

More reading

• These ASX shares are growing rapidly in FY 2021
• Why the Afterpay (ASX:APT) share price continues to dominate
• 5 things to watch on the ASX 200 on Wednesday
• Why healthcare, tech and consumer staples shares underperformed the ASX 200 in November
• Why the Afterpay (ASX:APT) share price and these ASX stocks could get a boost next week

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The WiseTech Global Ltd (ASX: WTC) share price is holding steady after it announced that its earnings forecast for FY21 is largely intact, providing the same level of guidance that it did in August.

In early morning session, the WiseTech share price is trading at $30.95, up slightly by 0.36%.

WiseTech’s FY21 guidance

WiseTech advised that its full year revenue for FY21 would be $470 million to $510 million, representing growth of 9% to 19% from prior year. This is the same level it had previously forecast during its August guidance.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) will be $155 million to $180 million, a growth of 22% to 42%.

WiseTech’s supply management software CargoWise will contribute a recurring revenue market share growth of 15%-30% as a result of large customer roll-outs and new customer wins.

The company says its acquisitions are now completed, and their full year contribution is expected to be $12 million.

The company will also make cost reduction of $10 million in FY21, and expects this to be in the range of $20-$30 million in FY22.

More about WiseTech

WiseTech develops cloud-based software solutions for the international and domestic logistics industries, and has more than 12,000 customers using its software across 150 countries.

The company is part of the so-called WAAAX, a group of Australia’s fastest growing technology companies. Including WiseTech, the WAAAX companies are Afterpay Ltd (ASX: APT), Altium Limited (ASX: ALU), Appen Ltd (ASX: APX), and Xero Limited (ASX: XRO).

More recently, WiseTech struck a partnership with the payment specialist company OFX Group Ltd (ASX: OFX). Under the partnership, WiseTech’s supply chain software company will use OFX as its preferred provider for international payments.

How did the WiseTech share price perform in 2020

For the 12 months ended 30 June, WiseTech delivered a 23% increase in revenue to $429.4 million. This was driven by a combination of acquisitions and its core CargoWise offering. CargoWise recorded revenue of $263 million, up 20% on FY 2019.

The WiseTech share price has increased by more than 30% in 2020, reflecting its strong performance during the year. At the current market price, the company commands a market value of almost $10 billion. 

More reading

• ASX 200 drops 0.5%: Treasury Wine sinks, Zip flat after AGM update, Bega Cheese rises
• ASX 200 falls on Thursday
• ASX 200 flat: Bega Cheese announces major acquisition, WiseTech reaffirms guidance
• Why the WiseTech Global (ASX:WTC) share price is climbing higher today
• 5 things to watch on the ASX 200 on Thursday

Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd and Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO and WiseTech Global. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Kogan.com Ltd (ASX: KGN) share price is storming higher on Thursday after announcing a new acquisition.

At the time of writing, the ecommerce company’s shares are up 5% to $16.93.

What did Kogan announce?

This morning Kogan announced that it has acquired 100% of the issued capital of leading New Zealand-based online retailer Mighty Ape for A$122.4 million.

This is payable over four tranches and subject to earn outs through to the delivery of its FY 2023 financial results.

According to the release, Mighty Ape operates online stores in New Zealand and Australia and has a focus on gaming, toys, and other entertainment categories. It has more than 690,000 unique customers and more than 895,000 subscribers.

It also has a reputation for fast delivery and excellent customer service. Management notes that this is demonstrated by Mighty Ape achieving Kantar’s highest rank among retailers in New Zealand for customer experience.

Financials.

Based on unaudited management accounts, for the 12 months ended 30 September, Mighty Ape generated revenue of A$120.1 million, gross profit of A$37.8 million, and EBITDA of A$9.9 million.

For the full year FY 2021, which ends 31 March 2021, Mighty Ape is forecast to generate revenue of A$137.7 million, gross profit of A$45.7 million, and EBITDA of A$14.3 million. This represents year on year growth of 43.7%, 58.1% and, 254.1%, respectively.

It is also worth noting that this excludes any potential benefits from synergies that may be available as a result of this acquisition.

Why is Kogan acquiring Mighty Ape?

Management believes Mighty Ape represents a highly complementary acquisition.

It notes that it combines two market leaders, enables Mighty Ape to build on its strong customer offering, and provides the infrastructure and expertise for Mighty Ape to further scale. Significant synergies are also likely to be available across numerous areas of the business.

Kogan.com’s COO and CFO, David Shafer, commented: “We are pleased to be bringing the iconic Mighty Ape into the Kogan Group, and are delighted to be welcoming Simon Barton and his team. We are a natural home for Mighty Ape, given similar histories and shared values — most importantly our obsession with delighting customers, and continually improving the online shopping experience. Mighty Ape has more than a decade of experience and track record of delighting Kiwi customers, and has become one of New Zealand’s most trusted brands.”

“Mighty Ape will give us significant scale in New Zealand and further strength across a variety of operational dimensions. We will be drawing on Mighty Ape’s deep experience in gaming, toys, other entertainment product categories and the New Zealand market, and combining this experience with Kogan.com’s sourcing, technology, systems, infrastructure, and marketplace capabilities, to further enhance the group’s already market-leading offering across the Tasman,” he added.

More reading

• After a record November, what’s next for ASX 200 shares?
• Why the Afterpay (ASX:APT) share price and these ASX stocks could get a boost next week
• Kogan (ASX:KGN) share price falls on option grants to top execs
• 3 ASX shares growing the dividend rapidly
• 4 ASX growth shares to buy in December

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Facebook Inc (NASDAQ: FB) has been taking small steps toward monetizing its messenger properties for years with the aim of providing tools to connect businesses to customers. It’s adding a new tool to the box with the acquisition of Kustomer, a customer relationship management software start-up. Facebook will pay about $1 billion, according to The Wall Street Journal.

With 200 million businesses using various tools offered by Facebook every month, there’s a massive opportunity to grow Kustomer and offer more monetized customer relationship tools to businesses.

Monetizing messaging

Facebook’s best effort to monetize its messaging apps has been through its WhatsApp Business. The app has quickly amassed 50 million users and has potential for a lot more. The app is mainly monetized through an API that allows other applications, like Kustomer, to connect with the WhatsApp messaging system. 

Kustomer takes that effort a step further by helping customer service teams manage their entire customer relationship across multiple social media platforms and communication channels. Facebook plans to continue supporting all communication channels on Kustomer.

Facebook’s other efforts to monetize messaging are less direct. It’s building more and more social commerce tools, including catalogs and payments in WhatsApp and Facebook Shops. Those tools position Facebook to do everything for a business from customer acquisition to sale, and with the addition of Kustomer, it can foster those customer relationships providing customer support and producing repeat sales.

“We want businesses of all sizes and across all industries to discover the value of messaging,” Dan Levy, VP of Ads and Business Products, and Matt Idema, COO, WhatsApp wrote in a press release. To that end, Facebook has a long way to go. It says 175 million users contact companies through WhatsApp daily. But WhatsApp has over 2 billion monthly active users. Meanwhile, WhatsApp Business’s 50 million users represent a tiny portion of the 200 million businesses across Facebook’s platforms.

The more reasons and ways Facebook can provide businesses to connect with customers on messaging, the more adoption it will see. And some of those tools will invariably present themselves with monetization potential.

The bigger business at Facebook

Monetizing messaging directly isn’t the endgame for Facebook. Giving businesses a reason to use WhatsApp, Messenger, or Instagram is part of a strategy to grow businesses’ engagement across all of their properties. Being able to support the entire customer journey from discovery to sale and then managing the customer relationship will likely lead to greater interest in Facebook’s bread and butter: advertising.

Facebook’s advertising business brought in $21.2 billion in the third quarter, up 22% year over year. Growth has been slowing, however, and not just because of the secular headwinds created by the coronavirus pandemic or because of the advertiser boycott it faced in July. Facebook has maxed out the ad load in its feed products on Facebook and Instagram, and it’s seeing time spent shift to its Stories products, which carry lower ad loads and lower ad prices.

For Facebook to accelerate its ad revenue growth again, it needs to produce more value per ad impression. And it’s done an excellent job providing the tools to businesses to do that. Facebook Shops, for example, is a great tool to improve sales conversions. Meanwhile, Facebook continually improves its targeting and measurement capabilities so marketers can tweak their audience and creatives for maximum effect.

Kustomer is another way for Facebook to sell businesses on the value of starting and managing customer relationships on Facebook, feeding the value of its ad impressions. If the tech company can also sell it as a service and grow the number of paying WhatsApp Business API users, that’s gravy.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Adam Levy owns shares of Facebook. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook. The Motley Fool Australia has recommended Facebook. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Facebook just spent $1 billion to monetize messaging appeared first on Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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