Zoom2u Technologies (ASX:Z2U): Blockbuster half-year results from providing the “picks and shovels” of the future of retail
It’s no secret that the eCommerce market is here to stay, and ASX-listed Zoom2u Technologies (Z2U) has just posted a blockbuster set of half-yearly financial results.
The delivery technology specialist managed to pocket almost as much revenue in the first half of the 2022 financial year as it did for the entire 2021 financial year, with the rapid growth driven by the ongoing adoption of its platform by a growing list of top-tier customers.
Zoom2u posted $10.9 million in gross marketplace revenue (GMV) for the first half of FY22 — an increase of 54 per cent compared to the same time period the year before.
Similarly, half-yearly revenue grew 46 per cent compared to the prior corresponding period to $2.7 million. For reference, the company tabled $11.1 million in GMV and $2.8 million in revenue over the whole of FY21.
On top of this revenue and GMV growth, Zoom2u added roughly 8700 new customers to its delivery marketplace over the first half of FY22, and 120 new customers signed up for the Locate2u SaaS product.
Some of the company’s newest customers include Best & Less, Super Pharmacy, Jaycar, and even Australia Post.
Online shopping was gaining rapid pace on traditional brick-and-mortar stores long before the global pandemic kept people inside their homes and expedited this process. Now, eCommerce has solidified its place in the everyday lives of all generations.
For all the sector’s growth, however, investors still face limited options when wanting to take a position in the eCommerce market: retailers seem to be one of the only ways to gain exposure to the space, but the performance of these stocks can be very hit-and-miss.
In such an uncertain and volatile market, even the big online retailers can carry more risk than an investor might want.
It can be astute, then, to consider not just the frontline names in the eCommerce space, but the last-mile players that are crucial to the future of online retail.
Zoom2u Technologies has the potential to be one such company. With the ability to streamline deliveries and offer customers full transparency over the delivery process, Zoom2u’s tech is designed to revolutionise the delivery systems so important to the eCommerce market.
While it would be remiss to not acknowledge the role COVID-19 restrictions have played in driving growth across the eCommerce sector in general, Zoom2u has managed to capitalise on these opportunities through a reliable technology platform, an impressive customer base, and a savvy two-pronged business model.
Zoom2u’s tech platform provides a simpler and more efficient delivery process for both customers and businesses.
The company provides a marketplace to connect customers to local delivery drivers in their area when purchasing products. Further, Zoom2u has a software-as-a-service (SaaS) platform that lets retailers manage their own fleet of delivery drivers.
For the customer, this means products can be delivered the day they are purchased and can be easily tracked, ultimately improving the customer delivery experience.
For the retailer, having more transparency between driver and consumer means the driver can be sure the customer is home to receive the parcel when dispatched — meaning less time wasted driving to local post offices with uncollected parcels or having to attempt multiple deliveries for single order.
In this way, Zoom2u is something of a pick-and-shovel play for the eCommerce industry: it provides some of the best-in-class tools needed for the sector to operate.
The old investment strategy goes like this: instead of investing in gold from a mine, for example, one instead invests in the picks and shovels used to dig up that gold. This is because the value of gold might fluctuate and prospectors might dig in the wrong spot, but they will be buying the tools regardless. Without the tools, the finished product can’t exist.
In the same way, without an effective delivery service, the eCommerce industry can’t exist. Zoom2u’s tech platform acts as enabling infrastructure for the world of online shopping.
What’s more, the nature of the platform makes Z2U’s business sector-agnostic: the same product can be offered across multiple industries.
The capabilities of Zoom2u’s platform can be seen through the customers that have already adopted the tech.
Retailers like Nespresso and Amart Furniture are taking advantage of streamlined delivery through Z2U.
Nespresso has turned all of its retail stores nationally into micro-warehouses, which allows the company — with the help of Z2U — to offer delivery for online purchases within a three-hour window.
Amart Furniture uses Zoom2u’s SaaS Locate2u platform to manage all of its delivery drivers around the nation, helping customers track their delivery line and allowing for full transparency across the delivery service.
Perhaps most importantly, Germany-based international logistics giant DHL, which is owned by Deutsche Post and delivers some 1.3 billion parcels per year, has been a Z2U customer for the past five years.
The quality of Zoom2u’s customers speaks to the quality of its technology.
While the ability to optimise the delivery process is already an important part of the future of online shopping, Zoom2u’s two-pronged offering ensures its platform has industry-wide applications.
The Zoom2u platform can be offered in two ways: direct to customers or through intermediaries.
Direct-to-consumer support means individuals can choose Z2U as a potential delivery option when shopping online.
On the other hand, by allowing third parties to offer effective delivery services, Zoom2u’s platform can be picked up by any retail partner in any industry. It becomes the ‘Intel Inside’ of delivery.
In a nutshell, Intel’s genius marketing strategy in the early 90s showcased just how crucial its microprocessors were in personal computers. The campaign made people realise that the processor was the intelligence inside the computer, and if your computer didn’t have Intel Inside, it wasn’t worth having.
Intel made its product, which was just one ingredient of the computer, into a household name.
In a similar sense, Zoom2u’s delivery technology is just one ingredient in the eCommerce industry. However, if you don’t have effective delivery, you may as well not have eCommerce.
By adopting the Z2U tech platform, third parties demonstrate the need for efficient and transparent delivery in an increasingly fast-paced world.
Zoom2u is still a newcomer to the ASX, listing in September 2021 following an $8 million initial public offering (IPO) under which new shares were offered at 20 cents each.
CEO Steve Orenstein said in January that during Z2U’s first few months as a listed company, it had managed to maintain “fantastic momentum”.
Z2U’s latest set of financial results shows just how quickly the company has grown.
Further to this local growth, Zoom2u also purchased the Local Delivery Shopify App to kickstart an expansion into North American and UK markets.
Zoom2u had $6.5 million of cash in the bank at the end of December, which the company said provided a “solid base” for the continued growth of its core businesses.
Shares in Zoom2u are currently worth 26 cents each. The company has a $47.7 million market cap.
The best investment strategies are often the ones that look beyond the frontline companies hogging the spotlight. Finding the most important picks and shovels of an industry can deliver exceptional rewards.