18 November 2019
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Out for a Jayride

Tim Boreham
28 February 2019

Jayride (JAY) 36 cents

Having jostled with a corpulent fellow passenger for a fair share of the armrest for most of the flight, the last thing a weary long-haul traveller wants to do is to deal with shuttle bus touts at the airport or face a long queue for the taxi.

Once in the cab, there’s a huge risk of being taken for a ride in more ways than one.

There’s nothing like being met by a uniformed fellow with a peaked cap and being whisked through the melee. Of course, it’s always possible to pre-book a service in any number of ways, but there’s been no way of comparing services on the one platform and then booking them online, a la bookings.com for flights and hotels.

With its home-grown technology based on a geospatial database, the Sydney-based Jayride is addressing the market gap, with its platform that has now been rolled out in 31 countries.

“I don’t know any ecommerce market place where travellers can compare and book transport,’’ Jayride co-founder Rod Bishop says.

While the platform has universal appeal to business and leisure travellers, it is most useful if there is a “niggly” problem.

“If you and six friends are travelling from Denver Airport to Brackenridge and you all have skis, what are you going to do?”

As much as developing the technology, building the business has involved contacting every ground transportation provider in the relevant geographies. To date, the platform encompasses 3,000 providers across more than 1,000 airports.

Of course, the providers need to be amenable to taking bookings through the platforms and paying Jayride a cut of the fees – typically 25%.

“Transport companies need work and it’s no different to forging a relationship with a concierge,” he says. “They are generally happy to pay a commission.”

A random search of the Jayride site shows 30 operators available for a transfer from Denpasar Airport to Ubud in Bali, with prices ranging from $28.20 to an eye-watering $160.

The traveller pre-pays with Jayride, with the transaction settled in the transport company’s currency at the time of the transaction.

Bishop says there are 110,000 transport companies in the US, while ‘driver’ is the number one job description. For the time being, Jayride is confining itself to airport-based operators who, collectively, carry out 7.7 billion trips (the average return traveller will need four transfers per expedition, two at each end).

Jayride reported $960,000 of revenue in the second (December) quarter, up 93% year-on-year on total transaction value (TTV, the value of the fares) of $3.6 million.

Jayride also lost $1.83 million, holding end of quarter cash of $2.28 million. Given expected cash outflows of $1.98 million for the current quarter, the ASX politely inquired as to the company’s solvency, to which management replied the forecast outflows did not take into account an expected $876,000 of cash receipts.

On management’s “aspirational economics”, the company breaks even when annual TTV reaches $50 million – four times the current run rate of $12.6 million.

With $400 million of annual TTV, the company would make $20 million of earnings before interest tax depreciation and amortisation.

Jayride raised $13 million in pre-IPO funding and then a further $1.5 million on listing in January 2018 (at 50 cents a share). The company raised a further $1.75 million in a placement in December, at 43 cents per share. 

 Two venture capital funds, Follow (the) Seed and Artesian Capital that remain on the register are no longer escrowed.

The company looks to be well placed with a first-mover advantage; management’s job is to build critical scale from its current 0.13% global market share before any putative rivals wake up to the opportunity.

tim@independentresearch.com.au

Disclaimer: The companies covered in this article (unless disclosed) are not current clients of Independent Investment Research (IIR). Under no circumstances have there been any inducements or like made by the company mentioned to either IIR or the author. The views here are independent and have no nexus to IIR’s core research offering. The views here are not recommendations and should not be considered as general advice in terms of stock recommendations in the ordinary sense.

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