Rent.com.au Ltd - Best-Ever Quarterly Revenues, Well Positioned for FY23
Rent.com.au Ltd
Best-ever quarterly revenues, well positioned for FY23
Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through their rental profile, rental bond and payments, and through a growing number of aligned transactional services. The company has announced record Q4 FY22 revenues of $0.88m, an increase of 9.0% on the previous corresponding period (pcp) and up 3.2% on Q3 FY22. The core Rent.com.au delivered positive EBITDA of $0.035m, its eighth consecutive positive EBITDA quarter. Including RentPay, the group EBITDA loss was $0.423m and included absorbing the $0.458m net investment in operating and marketing costs for the new platform. Th company ended FY22 with $2.23m in net cash. The RentPay platform now has 3,007 active customers transacting payments and the platform is now handling more than $1m in rental payments a week. Importantly, the redesign of the platform’s on-boarding process and user dashboard are now complete with the company noting that it has seen a 50% improvement in the conversion rate of people getting through its onboarding process. Rent.com.au highlighted that despite the incredibly tight rental market, its renter products grew 15% on the pcp with RentCheck, its verification and database check product, growing 27% year on year. In our view, Rent.com.au is well positioned to leverage its investment in both RentPay and its renter products in FY23, particularly in light of the recently-announced Origin Energy Ltd (ASX:ORG) strategic partnership. We have made no changes to our forecasts and our valuation is maintained at $0.23/share, which is predicated on RentPay securing 20% of renters on its platform by FY24.
Business model
Rent.com.au generates revenues from advertising and from rental products, with revenues for the latter derived from RentCheck, which verifies a renter’s identity and checks their record against the National Tenancy Database; from RentConnect, which delivers an integrated utility connection and $100 gift card to renters in conjunction with AGL; and from RentBond, RNT’s “move now pay later” product, which helps renters bridge the gap from one rental property to another by financing their bond online. The company’s growing RentPay app platform allows renters total financial flexibility in terms of how they make their rent payments while giving agents and landlords surety of payments on time. It also aligns Rent.com.au to the tenancy period, giving it an opportunity to engage with its audience for longer and extend the relationship into other revenue lines including insurance, telecommunications, loan and finance products.
Solid Q4 performance, well-positioned for FY23 leverage
Rent.com.au delivered Q4 revenues of $0.88m, its best-ever revenue quarter and a 9.0% improvement on the pcp. The company reported an EBITDA loss of $0.423m for the quarter with the loss from RentPay increasing 12% on Q3 to $0.458m as the company invested in the marketing of RentPay to help drive take-up. RNT also invested $0.415m in software development costs in the quarter. EBITDA from the core Rent.com.au search business was $0.035m, its eighth consecutive positive quarter. RNT noted that advertising revenues delivered their second-best sales quarter in Q4 while RentCheck, the ID verification and database check product, grew revenues by 27% on the pcp as renters sought to stand out in a continuing tight rental market.
Base-case DCF valuation of $0.23/share
Our base-case DCF valuation for Rent.com.au is $0.23/share and predicated on our expectation that RentPay will secure 5% of renters on its platform by FY24 and 20% by FY30. Evidence of faster-than-forecast take-up of RentPay together with the expansion of RentPay into other transactional products will likely result in our forecasts being revisited.
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- Rent.com.au Ltd - Best-Ever Quarterly Revenues, Well Positioned for FY2301 Aug 2022