Updater Inc (ASX: UPD) is a US-based company which was founded in 2010 and listed on the ASX in December last year.
It has developed an online technology platform designed to simplify the process of moving house. The platform connects with companies such as real estate agents and mortgage brokers and coordinates mail forwarding, logistics and record updating for customers.
It is focused exclusively on the US market where there are an estimated 17 million household moves each year.
It now has around 500 partnerships with real estate companies and recently reported processing 55,000 household moves in April 2016, representing an estimated 4.25% of the potential market.
The company has a goal of 15% market share by the end of 2017.
Source: Updater company reports
How will it make money?
Updater cites a first mover advantage in an industry with dynamics that favour one dominant player. If it can succeed in reaching critical mass it may benefit from a network effect in the long term – offering value to households, real estate companies, and related businesses.
Updater's revenue potential primarily comes from being able to provide value to businesses looking to market to moving households or to stay in touch with customers.
To demonstrate the value of its platform, Updater intends to commence three pilot programs by the end of 2016, with businesses operating in different market areas.
A pilot with Liberty Mutual Insurance was announced this week. Liberty is a Fortune 100 company and the second-largest property insurer in the US. The trial goes for 12 months and will determine whether the platform assists Liberty to reduce their churn rate on customers who change address.
Is it time to buy?
Shares listed at 20 cents and have traded as high as 38 cents. They are now trading at 29.5 cents, giving a market capitalisation of around $65 million.
As at 31 March, Updater had around $20.5 million in cash and is debt free.
Updater boasts some high-profile investors, such as billionaire Alex Waislitz, and Antony Catalano, a former chief executive of property website domain.com.au. Some prominent US venture capital investors have also backed the company.
Updater is still a long way from profitability and should be considered highly speculative, but given its potential, it is worth keeping an eye on.
My rule is to never invest more than 1% or 2% of my portfolio in a speculative technology stock. Check out the share price chart of 1-Page Ltd (ASX: 1PG) as a reminder of how volatile these types of investments can be.
