The MyDeal.com.au Ltd (ASX: MYD) share price has pushed higher following the company's release of a Q1 trading update and investor presentation.
Image source: Getty Images
About MyDeal.com.au
The MyDeal.com.au share price had an initial public offering price (IPO) of $1.00 with an indicative market capitalisation of $258.8 million at the offer price. It is an online retail marketplace operating within the Australian e-commerce market for household goods such as furniture and homewares. The platform connects merchants with consumers via its scalable proprietary marketplace technology and capital-lite business model.
According to the company, MyDeal.com.au sees significant growth in Australia over the next 5 years due to improvements in technology and millennials entering its core demographic age. It describes online penetration rates in Australia for furniture and homeware sales as in its infancy compared to the United Kingdom and United States. MyDeal estimates that online sales penetration is approximately 5.1% compared to the respective 15.2% and 16.6% in the UK and US.
Q1FY21 trading update
The company highlighted FY21 first quarter gross sales of $56.7 million, up 317% year on year. This represents a gross sales run rate of approximately $226.7 million. Its active customers increased 268% year on year to a record 669,897 as at 30 September 2020.
The company launched its own private label business, Duke Living, to leverage its proprietary marketplace data to offer quality products at affordable prices. Duke Living follows a just-in-time inventory model and outsourced warehousing to reduce capital requirements. It also possesses the flexibility to sell goods through other marketplaces such as those operated by eBay Inc (NASDAQ: EBAY) and Amazon.com, Inc (NASDAQ: AMZN) to drive volumes. This brand has generated gross sales exceeding $1.6 million between its launch in June 2020 and 30 September 2020.
Taking a closer look at its customer metrics, MyDeal points to an increase in new customers and repeat orders as drivers in its run rate growth. In this quarter, approximately 50% of its transactions were from repeat customers. From a demographic perspective, its core customer base sits within the key disposable income demographic with 25% of customers within the 25-34 age bracket and 20% within the 35-44 age bracket.
Moving forward, MyDeal aims to build an iOS and Android app that will improve the mobile shopping experience, reduce marketing costs and increase customer stickiness. The company will also be on the lookout for any acquisitions that complement its vision and objectives.
The MyDeal.com.au share price is up 7.44% higher at $1.30 at the time of writing following its solid maiden quarterly update and a wider rebound in the ASX 200.
Change in director's interest
In addition to its positive quarterly update, MyDeal.com.au also announced one of its board members had acquired an additional 200,000 shares at $1.296 per share.
Insider purchases don't always equate to positive medium to long-term share price performance. However, it does show the confidence of management and its willingness to put skin in the game.
