Investment Ideas From the Edge of the Bell Curve
Family safety and connectivity business Life360 (ASX:360) is currently up 6% after hiking prices for some of its US-based product offerings but kept the price for its annual subscriptions unchanged.
Life360 first announced in August that it was testing price hikes for new monthly subscriptions.
360 saw enough positive data to make the price increases permanent for the monthly subs.
Life360 expects the price changes to increase churn but its testing suggests the elevated churn will be within its tolerance threshold.
Any rise in churn is expected to be within 360’s target of a 10% reduction in retention.
Will any retention reduction be offset by higher revenue through higher prices?
Life360 will provide a comprehensive update on the new pricing structure in November.
Life360’s CEO, Chris Hulls, commented on the news:
“Life360 has always focused on providing great value for our members – free and paid. Our last price increase was with the introduction of the three tiers of membership in 2020, which also included the addition of an extensive range of products and services within each tier. With our enhanced product rollouts, we have continued to increase the value of the user experience for all our members. We believe this value will be further enhanced by the integration of Tile with Life360; Life360 US users will be able to add Tiles to the Life360 map this month, and the rollout of subscriptions bundled with Tile hardware will launch in the early part of CY23.”
Some Life360 customers were not impressed, airing their dissatisfaction on Twitter.
Life360 does not expect “meaningful” impact on subscription revenues in CY22.
A “more significant positive impact” on subscription revenues is expected in CY23 and beyond.
Life360 also noted that it still has “limited visibility” going into the Q4 holiday season.
ASX BNPL stock Sezzle (ASX:SZL) saw underlying merchant sales growth slow to 0.6% in 3Q22 to US$421.5 million.
Sezzle did report that total income rose 4% QoQ to US$30.4 million.
SZL said the gap between total income less transaction related costs and adjusted operating expenses “narrowed significantly from the peak level of a negative US$24.5M in 4Q21 (average monthly US$8.2M) to only a negative US$3.5M in 3Q22″.
The BNPL will release a full set of numbers for 3Q22 on 31 October, 2022.
Sezzle expects US$60 million in annualised revenue and cost savings initiatives to be “fully rolled out by 1Q23”.
To bolster revenue, SZL said it has launched “convenience fees”, “merchant pricing adjustments”, and a Sezzle Premium subscription which counted 95,000 active subscribers as of Thursday.
Sezzle CEO Charlie Youakim said the fintech has made “great strides in the past year as our ‘burn’ in 3Q22 was a negative US$3.5 million compared to a negative US$13.0 million in 3Q21.”
The end of Liz Truss’s short tenure as UK Prime Minister has settled a competition attracting global media attention.
An iceberg lettuce adorned with a blond wig has outlasted outgoing PM Liz Truss’s hold on power.
Seven days ago, British media outlet the Daily Star set up a live webcam streaming the wilting of the lettuce to see if its shelf-life will outlast the prime minister’s.
It did.
BREAKING NEWS:
🚨 THE LETTUCE HAS OFFICIALLY OUTLASTED LIZ TRUSS AND WON 🚨
ALL HAIL THE LETTUCE.
— Daily Star (@dailystar) October 20, 2022
The stunt came after The Economist quipped last week that her tenure is likely to span the shelf-life of a lettuce.
Source: The Economist
Thursday was a big news day for graphite producer Syrah Resources (ASX:SYR). It announced a potential US$220 million grant from the US Department of Energy, signed a memorandum of understanding with LG Energy, and released its quarterly production results.
But SYR also sneaked in an operational update regarding its Balama graphite operation in Mozambique.
A month after notifying the market of “illegal industrial action” from a small pocket of local employees, Syrah yesterday briefly noted that the dispute is not yet resolved.
While “full operational capability has been restored” at Balama, “further illegal action disrupted a full operational restart”.
Unlike last month, Syrah has kept its staff and contractors on site “with the support of contractor and [Mozambique] government security forces.”
Syrah concluded the update by saying it is working to restart full Balama operations as soon as possible.
Zip introduced a new metric in its latest quarterly by distinguishing between total customers and active customers.
Total customers include all those who have a live account with Zip. Active customers are users who have had “transaction activity in the 12 months” to the end of the quarter in question (in this case, the September quarter).
While Zip reported total customers for the quarter rose 50% year-on-year to 12 million, active customers rose 17% YoY to 7.4 million.
Meaning also that ZIP’s active to total customer number ratio for Q1 FY23 sat at 61.7%.
Worrying for the BNPL firm, active customers fell 1% quarter on quarter.
More worryingly still, the QoQ drop in active customers was solely attributable to a slump in the key US market.
Active US customers fell 5% QoQ and 3% YoY to sit at 3.9 million at quarter end.
Zip said the US customer growth rates were:
“Impacted by adjustments to internal risk settings (decreased approval rates, reduced credit limits and forced account closures), as well as external factors, with the reset driving a significant improvement in loss rates ahead of the peak sales season.”
Using Zip’s new distinction between total customers and active customers, we can surmise:
Has the ratio fallen or risen?
We know that ZIP’s total to-active-customers ratio for Q1 FY23 is 61.7%. Has that improved or worsened since Q1 FY22?
Since Zip reported total customers rose 50% on Q1 FY22 to 12 million and active customers rose 17% on Q1 FY22 to 7.4 million, we can work backwards to find out that in Q1 FY22, Zip’s total customers were 8 million and active customers were 6.3 million.
So ZIP’s Q1 FY22 active-to-total customers ratio was 78.8%.
Since then, it has worsened.
Noteworthy, too, is the negative trajectory of Zip’s US customers.
In Q1 FY22, Zip reported having 5 million US customers. In Q1 FY23, Zip reported having 3.9 million, a 22% drop.
$ZIP's USA customer numbers graphed QoQ: #BNPL #Zip #ausbiz pic.twitter.com/pPo5Mrzzio
— Fat Tail Daily (@FatTailDaily) October 21, 2022
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Investment ideas from the edge of the bell curve.
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