I emailed. He responded.
Check out the below:
Dear Chris,
I have been invested in your company for over 3 years now, with a decently large holding.
The financial performance on the income side is getting better and better. But the latest movements in the share price have begun to raise a cause of concern on my investment in CL8. I am hoping that you can answer some questions below to alleviate my concerns on where things are heading. I hope you can find the time to reply.
DriveMyCar:
First of all I’d like to acknowledge your strategy over the past 6 months – to gain an increasing supply of cars on DMC which I believe has just surpassed 1000, so congratulations on that achievement. But to run a business, you need demand.
What is the strategy to increase demand? Or is the strategy to further increase supply before pushing for demand? If so, what is your goal of number of cars listed?
—As previously announced our strategy is to secure demand from a range of channels are via direct traffic, maximising repeat customers, Uber, RACV’s 2.1 million members, online advertising and PR. The December Quarterly provided details of the record results achieved in many of these areas.
Mobilise:
It is great to see that it has launched and moving along, but again in any recent announcements there hasn’t been any material news on the financial performance of Mobilise. Are people even renting equipment through there yet? Also what marketing initiatives have you used to push for sales? There is a company in New Zealand called Equipment Share. It only just launched in the last 2 months and I have seen constant advertisements on Instagram and Facebook. Now I don’t think ill ever need to use the service as it is more commercially designed – but it gets word of mouth out about the concept of equipment sharing, starts a conversation and is in the back of peoples minds.
—Listings and rentals are taking place on Mobilise. As previously announced, advertising is via SEM and Facebook to gain awareness plus direct communications with 15,000 Housing Industry Association members. If you are seeing ads for a NZ based company and you are not in the target market, I would suggest that they are wasting their marketing budget! Our advertising is targeted towards the most valuable customers for maximum efficiency.
I have further questions below, and I’ll bulletpoint them to make it easier to answer.
-CL8 has got a substantial amount of cash and it seems like you are just running business as usual instead of investing in it to push the company into the next phase of growth. With the $1.8m equity facility, and the cash in the bank, are there plans for
aggressive expansion or will CL8 continue to run business as usual for the time being?
—Since raising additional funds we have invested in additional personnel, RACV DriveMyCar, Mobilise, more marketing and further development of our technology platform. Much of this extra investment took place for the full 6 months of the period from July – Dec 2017 however the launches only occurred in the latter months of the period. The benefits of this investment will continue to deliver in future periods.
-Has CL8 put in any tender bids for any government contracts? (Note: saying you did isnt commercially sensitive, only telling me you were awarded it is).
—We have reviewed government tenders however we to date we have not seen a strong correlation between the very specific tender requirements and our operations
-You have increased the supply of DMC vehicles, how many cars are you wanting to have in supply or what is your target?
-If you plan to start aggressive growth initiatives, when will they commence and what initiatives do you have in place? I note you are having record revenue numbers which is outstanding, but my concern is the
cash burn each quarter as I do not want to have my holdings further diluted by a capital raise just to keep the business running.
—Cash burn increased in the latest period because we increased investment in the business. As announced, if non-cash expenses and new investments are excluded the cash burn decreased due to the higher revenue.
-How are you going to handle the recent decline in share price value? I believe this is reflective in the stagnant information and news flow from CL8. Why in your opinion does it go down when you sign a deal with Peugeot? It seems that there has been no 'money making announcements' i.e. demand, just solely supply. What strategies are in place to combat this?
—
On 15 January, 30 January and 28 February we made three separate announcements about record revenue and key metrics and announcements will continue to be made to highlight new deals and results. We aim to strike a balance between spending time on announcements and actually delivering results. Ultimately maximising growth will have the biggest impact on share price growth. That said, we are conscious that we can always improve the way that the strategy and results are communicated.
-My personal opinion is that the shareholders need a detailed update on the plans and strategies that are in place to help CL8 grow. Is your ambition to be a market leader? If so how are you going to become one, and in what industry?
—Yes. See above
-What is the plan with mobilise, a breakdown of demand and supply strategies?
-What guidance can you give on becoming cashflow positive?
-What are the other areas that you are hoping to expand into?
-Have you ever thought to raise a huge amount via. private venture funds (say $30 million) to use this cash and seriously expand the business? Go global?
—Yes
I think all shareholders have a lack of confidence at the moment because of the limited news and information flow coming from the company.
Maybe an official announcement isnt the right way to share this information. I have a lot of questions, and I think a lot of holders have questions too, and I would really appreciate answers to them, otherwise I risk having to sell my holdings because the opportunity cost becoming too high.
Looking forward to hearing from you soon.
Regards,
Dan
