Rent.com.au Ltd: New RentPay SafetyNet Facility in Place, Launch in Q4
Rent.com.au Ltd
New RentPay SafetyNet facility in place, launch in Q4
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 that it has entered into an agreement with SkyCredit Pty Ltd to provide a SafetyNet facility to digital wallets that will allow renters to draw down one week’s rent in an emergency. The SafetyNet facility is designed to help alleviate financial pressure on renters and maintain their payment record. SkyCredit is the parent company of Fair Go Finance, Rent.com.au’s finance provider for RentBond. The company noted that as a result of putting this agreement in place, the launch date for RentPay had been pushed out 4-6 weeks. The company previously had flagged the end of Q3 FY21 for the launch. We anticipate it will now be mid-Q4 FY21, however it is worth noting that we have factored in little by way of revenue from RentPay in FY21. As we flagged in our recent initiation report, we view RentPay as a transformative initiative for Rent.com.au, giving the company an opportunity to extend its relationship with renters into the rental tenancy period and beyond with transactional products such as telecoms, loans and finance products. Our base case valuation of $0.35/share is unchanged.
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 soon-to-be-launched RentPay app platform will allow 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.
RentPay launch in Q4, Q3 outlook for record revenue
Rent.com.au has announced that it is on track for another record revenue quarter for the core rent.com.au portal business with significant growth over the previous corresponding period, despite the expected seasonality being more subdued than normal in Q3. At the same time, the company has materially completed the development of RentPay for launch, except for the additional feature of the SafetyNet facility which will now be included in the 1st phase of RentPay’s rollout. The inclusion of SafteyNet has pushed out RentPay’s launch by 4-6 weeks, but the company sees the facility as an opportunity to actively improve renters’ financial wellbeing as it will help those who use it maintain a consistent payment record. The arrangement with SkyCredit will maintain mutual exclusivity on this product for 5 years.
DCF valuation is $0.35/share
Our base case DCF valuation for Rent.com.au is $0.35/share. Our valuation is predicated on our expectation that Rent.com.au’s new flagship product RentPay will secure 5% of renters on its platform by FY23 and 20% by FY30. In our view this is entirely achievable. We have dimensioned more optimistic cases which add co
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