Making a Case for Ackroo ($AKR.V $AKRFF)

You’ve probably heard of them.  You may, like me, have even owned shares of them before but for various reasons they may have fallen off your radar.  

Ackroo Inc. is definitely worthy of a second look and due to some recent developments it may be time to start following them again and consider renewing your research..  

(TSXV: AKR) (OTC: AKRFF) Ackroo provides gift card and loyalty processing solutions to help small to medium sized businesses attract, retain and grow their customers and their revenues. Through a SaaS based business model Ackroo provides an in-store and online automated solution to help merchants process gift card & loyalty transactions at the point of sale, provide key administrative and marketing data, and to allow customers to access and manage their gift card and loyalty accounts.

Recently Ackroo announced a partnership with First Data Canada, a division of First Data Corporation (NYSE: FDC), a global leader in commerce enabling technology and solutions.  First Data is one of the world’s largest payment processors with a suggested 50% + market share in the US alone.  This, in addition to two other main channel partners in Chase Paymentech and Global Payments, will help drive Ackroo’s organic growth going forward.  

FDC

First Data (NYSE:FDC)

According to Ackroo’s CEO Steve Levely, there are only seven main acquirers in Canada and it is a great accomplishment to have three of them.  He also stressed the importance of having the right partners and feels Ackroo has the right ones in place.  “These three companies also have many ISO’s that we can work with (two of the larger ones we already do in POS West – Global ISO and Everlink) and so the model we are building is smart in both go to market and technically with them, and is why I see us accomplishing great things.”   

One way that Levely sees additional revenue in the near term is the launch of a mobile application.  According to the May 6th, 2016 news release they intended to develop one themselves but with the acquisition of D1 Mobile’s Appetite platform, they reported that they will now have this offering in the next 90 days.  I asked Steve if that timeline is still accurate and he confirmed that they are on track to launch that version of their product in July.  “It’s a very exciting enhancement.  From a rough numbers perspective we anticipate a 25% increase in revenues from our current loyalty customers (keep in mind loyalty only makes up 30-40% or our customers) plus we believe this addition will encourage more current customers to move to loyalty because of consumer interest and demand and will also help us win against competition as many of our competitors have already deployed a mobile app.”  He went on to say, “…we do see this as a great product development piece not only to continue to stay competitive and relevant but also to grow our revenues and customers.”

Ackroo is also very close to profitability. If you look at the Q1 2016 financials, they had a loss from operations of $88,122, minus $25,680 for non-recurring IR activities; so basically a little over $60,000.  Considering the company’s current growth rate, and Steve’s focus on reducing costs in all departments,  it seems like they are just a few new customers away from a positive EPS.

Here are several other points that are worth mentioning:

  • In May Ackroo announced the restructuring of the payment terms for the Dealer Rewards Canada acquisition.  The amended terms will see Ackroo pay $330,000 on or before July 1st, 2016, then complete a series of 24 monthly payments of $36,916 commencing January 2017.  This significantly reduces Ackroo’s current capital requirements and because of this they greatly reduced the amount of their most recent private placement, thus keeping share dilution to a minimum.
  • They raised $587,316 in the most recent private placement covering the July Dealer 
    Rewards payment plus some additional working capital.  
  • The CEO, 2 board members, plus some management staff all participated in the recent private placement contributing close to 10% of the financing.
  • They have plans to expand into the US market.  Levely confirmed that the company anticipates growing into the USA in 2017, ideally through their channel partners.  “Our plan all along has been to establish ourselves first in Canada before stepping into the US and we feel we are only 6-9 months away from being ready to do so.”

It’s not going to be long before Ackroo’s financials start turning heads and this window of opportunity (getting shares at a 5 million market cap) closes.  I also imagine there are many things going on behind the scenes after the new First Data (NYSE:FDC) Partnership.  They are very close to an exciting tipping point assuming they continue to execute.

G. Kirk Holt

Disclaimer: At the time of publishing this article, G. Kirk Holt is a shareholder of Ackroo Inc.

 

Subscribe to our Newsletter

Newsletter-Button

 

 

The Trader’s Boardroom (“TradersBoardroom.com”) is an electronic publication targeted towards independent investors, containing the opinions of our contributors on financial information, including, but not limited to, information on publicly traded companies and the stock market. The information is presented by The Trader’s Boardroom(“TradersBoardroom.com”) and can also be based on information supplied by third parties.

The information presented by The Trader’s Boardroom (“TradersBoardroom.com”) is for informational purposes only. All articles and commentaries in this email are the result of an independent analysis and, even though we have made efforts in this regard, we cannot guarantee that the information is accurate and complete. The companies mentioned in this email are not responsible for the information that is presented. All information is subject to change, without notice, and The Trader’s Boardroom (“TradersBoardroom.com”) is not responsible for updating the information contained in this email. Joe Bleackley is a managing partner at New Raven Capital which is a shareholder of Ackroo Inc. and has been engaged in a market advisory role.The information presented is not destined to be, and does not constitute a sales offer nor solicitation of an offer to buy financial investments. Investors should consult their financial adviser before making any investment decisions concerning the companies mentioned. Our contributors may buy and sell the stocks of these companies.