Rent.com.au Ltd: Empowering Renters Through Transactional Strength
Rent.com.au Ltd
Empowering renters through transactional strength
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 listed on the ASX in June 2015 via a backdoor listing through Select Exploration after raising $5m at $0.20/share to give it a market capitalisation of $17.6m. FY21 was a transformative year for Rent.com.au, during which it launched its app-based payments platform, RentPay, which is designed to give renters total financial flexibility in when and how they make their rental payments while giving agents and landlords surety of payments on time. RentPay also delivers renters features such as ScoreBuilder, which reports RentPay’s customers’ account status each month to a credit reporting agency (over time this aims to help improve renter borrowing capacity), and SafetyNet which provides short term loans to provide a rent buffer in the event of unexpected events. Launched in June, RentPay ended the year with 700 active users. With more that 700,000+ unique visitors to its website each month, Rent.com.au has a target of 200,000 RentPay customers by the end of FY23. Our DCF valuation of $0.35/share contemplates RentPay securing 5% of renters (120,000) by FY23 and 20% by FY30.
Business model
Rent.com.au generates revenue from advertising and from rental products, with revenue 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 recently launched 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.
Maiden profit for core business, RentPay off to a strong start
Rent.com.au reported FY21 revenues of $3.094m, an increase of 26.2% on the previous corresponding period. The core Rent.com.au business delivered its maiden operating profit in FY21 of $0.117m, a significant achievement, in our view, in a year where COVID-19 slowed rental activity across Australia. The recently launched RentPay app payments platform incurred operating and development costs through the year and was launched late in Q4. Despite this investment, the EBITDA loss for the year was $0.69m, a 39% improvement on FY20 despite the increased investment in the RentPay launch.
Look to purpose-led companies, online marketplaces for peers
There is growing evidence that purpose-led companies perform better operationally than those which are not. To that end, we consider both early stage purpose-led companies and online marketplaces to be peers for Rent.com.au. These include finance platforms Douugh (ASX:DOU) and Plenti (ASX:PLT); single focused online marketplace iCar Asia (ASX:ICQ) and property tech group PropTech Group (ASX:PTG) for business metrics; and with an element of BNPL in its RentBond product, we would look to Ioupay (ASX:IOU) for peer discussion.
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