Tuesday 7th July 2015
Below is a copy of a presentation that the German business publication, Manager Magazin, posted in April 2013. The presentation itself is in English but I've used Google's translate function to translate Manager Magazin's accompanying text into English. The original German version may be found via the link above.
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| Manager Magazin - on Rocket Internet presentation to investors Source: http://www.manager-magazin.de/ |
It's reportedly a presentation used by Rocket Internet in marketing itself to potential investors in January 2013. I assume this presentation is not some sort of spoof and that it is the actual material used by Rocket Internet, which at the time would have been a private concern. If it is a spoof, then I'd be surprised - as Germans aren't renowned for pulling legs - but if it is then you may as well disregard the rest of this post.
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| Manager Magazin - on Rocket Internet presentation to investors - January 2013 Source: http://www.manager-magazin.de/ |
Clearly, January 2013 is some time ago. However, if I'd been on the receiving end of this pitch, then in hindsight I'd be a touch disgruntled and left with a feeling I'd been somewhat misled. And here's why ...
On the final page of the presentation, it highlights the revenue run rates for the major companies in Rocket's portfolio, based on November 2012 trading. Given that most of these companies had been established in less than 24 months prior, this is a great way to leave would be investors positively purring at the prospect of a bite at - not one - but eight incredibly rapidly growing online businesses.
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| Manager Magazin - on Rocket Internet presentation to investors - revenue run rates of leading portfolio companies Source: http://www.manager-magazin.de/ |
The big five: Lamoda, Dafiti, Home 24, Zalora and Lazada
As of January 2013, it would appear that Rocket presented its top five revenue generating businesses to investors as achieving run rate revenue based on November 2012 annualized run rates as follows:
- Lamoda, founded two years prior in 2010, was achieving €233 million in run rate revenue.
- Dafiti, also founded in 2010, was achieving €225 million in run rate revenue.
- Home 24, founded in 2009, was achieving €151 million in run rate revenue.
- Zalora, founded one year prior in 2011, was achieving €97 million in run rate revenue.
- Lazada, founded two years prior in 2010, was achieving €42 million in run rate revenue.
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| Rocket Internet annualised run rate revenue based on November 2012 trading Source: Manager Magazin, 19 April 2013 |
Skipping forward to Rocket's IPO documentation from September 2014, and there are some sizeable differences between the suggested revenue run rates that were marketed to potential investors in January 2013 and the actual revenue out-turns for 2013.
For example:
- Lamoda's revenue was reported to be RUB 5,150 million for 2013, or c. €122 million at annual average EURRUB rates for 2013. This is 48% below the run rate indicated to potential investors in January 2013.
- Dafiti's revenue was reported to be BRL 419 million for 2013, or c. €146 million at annual average EURBRL rates for 2013. This is 35% below the run rate indicated to potential investors in January 2013.
- Home 24's revenue was reported to be €93 million for 2013. This is 38% below the run rate indicated to potential investors in January 2013.
- Zalora's revenue was reported to be €69 million for 2013. This is 29% below the run rate indicated to potential investors in January 2013.
- Lazada's revenue was reported to be €57 million for 2013. This is 15% below the run rate indicated to potential investors in January 2013.
In fact only the smaller revenue generating companies from the presentation: Jabong and Linio achieved 2013 revenue that was actually in line with that of the run rate presented to potential investors in January 2013.
On a cumulative basis, while as at January 2013 Rocket's management were implying total run rate revenue for the combined businesses of €855 million, in the event the out-turn for full year 2013 was 32% less, at €579 million.
As I mentioned prior, had I invested at a private investing round in January 2013 on the back of that presentation, I might feel a bit miffed. As there are sizable losses and an accompanying large cash burn pretty much across all of Rocket's portfolio, which have only continued to increase since, Rocket must be valued on some sort of revenue multiple. And yet the revenues fell short of what may have been expected from the run rates indicated from November 2012.
Maybe Rocket's big five just had a blitzing November 2012 in the run up to that marketing round in January 2013?
Of course the silver lining for any 2013 investor is that Rocket's valuation has rocketed higher since then, while revenues have also risen dramatically into 2014. More on each later ...
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| Rocket Internet annualised run rate revenue based on November 2012 trading as compared to 2013 full year revenue Source: Manager Magazin, 19 April 2013, and Rocket Internet IPO Prospectus |
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| Rocket Internet annualised run rate revenue based on November 2012 trading as compared to 2013 full year revenue Source: Manager Magazin, 19 April 2013, and Rocket Internet IPO Prospectus |
Maybe Rocket's big five just had a blitzing November 2012 in the run up to that marketing round in January 2013?
Of course the silver lining for any 2013 investor is that Rocket's valuation has rocketed higher since then, while revenues have also risen dramatically into 2014. More on each later ...
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The key is in the very complicated interlace of "Jade xxxx GmbH." and "Brilliant xxxx GmbH." companies.
ReplyDeleteFor me it seems only a big Ponzi scheme, a big bubble full of dark smoke. I suspect no one of those companies are designed to be profitable ever. They have big losses because they sell below cost to gain traction. All cloned companies seem like bubbles.
All European countries fit in Brazil, Russia, Africa or Australia,
If you want to replicate a big success in Brazil, it will be as hard as the same to replicate it in all European countries, but in this case with 1/8 of population and the majority of the persons DO NOT own or WILL NOT use a credit/debit card to buy online! They will prefer to research online and then buy offline.
Many if not most, USA, Canada or European businesses models are unfeasible in Latin American countries! Perhaps the same situation for Africa, Russia or even Australia.(transportation costs could be 10 times bigger than Europe)