2016 Kitchen Cookoff , Sizzling Stocks of the Year Contest Message Board

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Microcap & Penny Stocks : 2016 Kitchen Cookoff , Sizzling Stocks of the Year Contest

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From: WorthaDeeperLook	2/3/2016 10:46:32 AM
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AKR - I've been thinking a lot about the acquisition strategy and how to efficiently communicate the long term potential of Ackroo. This is what I see: - Competitors bear the cost of acquiring customers on their income statement. Without scale, they often show inferior profitability and can be acquired for a low multiple of revenues (~2x). - Ackroo buys them, migrate customers on their platform and cut 75%+ of SG&A costs. The company only keeps the best talents but must make sure to have sufficient staff to support accounts = Potential for high ROIC% - The cost to acquire new customers via acquisitions is accounted for in the income statement via the amortization of intangibles, which doesn't affect the EBITDA metric of Ackroo (unlike competitors where acquisition costs are included in the Sales and Marketing line and are real cash expenses). Normally, that shouldn't have an impact on valuation, but it sure helps to show the real profitability of a business vs. the SaaS model where acquisition costs are accounted upfront and revenues during the lifetime of a customer. - Once Ackroo reaches scale, they can reinvest free cash flows to do more acquisitions at high ROIC%. Gift card and loyalty is a huge industry, which give Ackroo plenty of inorganic growth runway. - 20% organic growth potential is compelling too, but without an acquisition strategy it makes for a OK investment opportunity... Not a multi-bagger opp! - Ackroo needs capital to execute. - Long-term, I see two competitive advantages: i) low-cost provider with ii) a strong network of industry partners and clients. In short, I don't see Ackroo as a tech play but as a financial play (valuation/accounting arbitrage + economies of scale). Correct me if I'm wrong but I don't think tech plays a major role in gift and loyalty solutions. As a long as your platform meets industry standards, it's all about sales and marketing. When Q4 is released, I'll be able to use Dealer Rewards Canada as a Case Study to support my acquisition strategy thesis. Then, well, the company needs capital to show it can replicate its early sucess... This is the upside for those willing to put their money at risk.

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