Transport startup Jayride posts 122% revenue jump in first results as investors question failing tech listings

The founder of recently listed Aussie startup Jayride has spoken about the importance of compliance and continuously updating investors after posting the company’s first ever half-year results, as investors continue to question the role of Australia’s stock exchange in the failings of tech startups.

The airport transport startup completed its $1.5 million initial public offering last year, and successfully debuted on the Australian Stock Exchange (ASX) at the end of January. Last week the company reported its 2018 financial year half-year results, showing year-on-year revenue growth of 122% growth, to $946,550, and a 93% increase in passengers travelled.

However, the company is still operating at a loss, posting total operating expenses of $3.9 million for the half year, equating to a total loss of $3.1 million after the company’s income was taken into account. Jayride also revealed it had $7.1 million in net assets, up from $700,000 in June 2017.

Jayride founder Rod Bishop tells StartupSmart the company’s first large-scale report to the market was an all-round success (despite feeling some nerves during the investor call), following through on the expectations set during its IPO and inviting “great” feedback from investors.

“The IPO was to give us more power as a company and subject us to more rigorous compliance and exposure so investors can have more trust in us as a small company,” Bishop says.

“It’s nice to be able to actually put our effort where our mouth is and take those first steps towards serious and stable growth.”

Jayride was founded in 2012 and in its time as a private company, Bishop says Jayride had built in a number of robust frameworks and systems for correct and accurate reporting to stakeholders at the time, putting the company in good stead for being a public company and enabling it to respond well to investor inquiries.

One example Bishop gives of its reporting practises is the company’s recognition of the statistics relevant to its investors, such as the relationship between Jayride’s revenue and advertising spend, which he says shows the company is not investing beyond the ability, and clearly shows the “profit and contribution for the company from those ads after paid acquisition”.

“Our investors were really keen to understand that, and we had certain financial methodologies in place to pull out our costs and assign them appropriately. This was easy to show because it’s how we think, and it’s something we’ve built into our accounting over the course of many years,” he says.

With a number of listed tech companies stumbling over disclosure recently, Bishop believes listing is only hard work for a startup when insufficient preparation is done during the days as a private company.

“A lot of people tell you listing is a lot of hard work in terms of compliance and reporting, but if you’ve built confidence in your company for a number of years it’s just a continuation of the same thing,” he says.

“We’ve always been on the front foot as a private company, and as a public company it’s the same rules. Once you know them and you’ve got the support of a good company secretary, it’s just more of the same.”

Is the ASX to blame for failing tech listings?

In the aftermath of serious concerns about the disclosure practices from listed startups GetSwift and Big Un, an article from Fairfax quoted a number of Australian venture capitalists lashing out at the ASX, blaming the exchange for not scrutinising tech listings well enough.

Airtree Venture’s Daniel Petre said the ASX’s view of ‘buyer beware’ was “complete bullshit” and there needed to be “some more scrutiny of some of these listings”.

“There are a number of wonderful technology companies and there is this segment of trash that is on the ASX, which is disappointing for the sector as a whole,” Blackbird Ventures founder Niki Scevak told Fairfax.

But having recently gone through the listing process, Jayride’s Rod Bishop disagrees with the sentiment expressed around a lack of scrutiny, saying while the ASX’s listing rules makes it hard for small companies to list, it does require startups to demonstrate their stability, reliability, and resilience.

“Having just gone through the listing process, it does a good job of making sure companies that list are able to comply. Compliance is designed to protect shareholders and investors, and if particular companies are struggling to comply they will be called out,” he says.

“Investors are looking to high-growth companies, and the ASX is potentially a good place for a high-growth company to be. We take reporting very seriously, and going forward we’ll be taking on all feedback as well.”

Australian startups lured by the NASDAQ

Speaking to StartupSmart earlier this month, investor and Shark Tank judge Steve Baxter says he did not believe it was fair to blame the ASX for the poor performance of “any security listed on it”, and reinforced the ASX is simply the platform.

“For these stage companies raising money via the ASX is about getting capital to assist with a business plan. People involved with the company have to be comfortable with reporting to shareholders (and the public) things like their results and other material matters,” Baxter says.

“If you are about an honest conversation with your stakeholders (customers and shareholders), then listing shouldn’t particularly scare you. If you are out to rip off shareholders, customers or staff, then maybe business isn’t for you, let alone listing.”

However, Alan Jones, prominent entrepreneur and co-founder of soon-to-launch venture fund M8 Ventures, told StartupSmart the onus is on investors in backing high-risk, small-cap companies, but it’s a problem that’s not exclusive to tech.

Jones is more concerned over the number of promising Aussie startups flocking overseas to list, lured by the prospects of more capital and more customers.

“Good Australian tech companies which should be listed on the ASX tend not to be. First, they tend to move to the US to pursue greater customer access and/or investor interest. Next, when they’ve got lead investors which are American, they’re persuaded to list on the NASDAQ,” he says.

“Blackbird, AirTree (and one day soon, in its own small way, M8 Ventures) are working on solving the first problem: backing great local talent to stay in Australia longer by supporting them in larger rounds than before.

“I hope that will mean more great companies will choose the ASX rather than the NASDAQ in future. And they won’t implode on the ASX because their fundamentals will be in place and the time will be right.”

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