Comment on OrderYOYO’s Annual Report 2021

OrderYOYO published today, March 22, its annual report of 2021. The following are some key financial metrics that we have chosen to highlight in connection with the report:

  • Net sales grew by 42%
  • ARR realized at DKK 120m – corresponding to 15% YoY growth
  • Number of Restaurant Partners by the end of 2021 amounted to 5,037 (3,567)
  • EBITDA before non-recuring costs realized to DKK 0.7m

OrderYOYO Delivers Net Sales Above Our Estimates

For the full year 2021, OrderYOYO shows net sales of DKK 108.5m (76.3), which corresponds to a growth of 42% compared to 2020. Despite less tailwind from Covid lockdowns in 2021, compared to 2020, OrderYOYO delivers a growth in number of Restaurants partners of 41%, which Analyst Group assumes is one factor of great importance behind the strong growth during the period. Annual Recurring Revenue (ARR), measured as the annualized value of Monthly Recurring Revenue (MRR), i.e. MRR in a given month times twelve, grew from DKK 104m by December 2020 to DKK 120m by December 2021 – equivalent to a growth of 15%.

OrderYOYO’s stock, like many other growth companies, has been severely punished as a result of increased geopolitical tensions and higher risk premiums. That the share (YTD) is down approximately 20% is, in our opinion, due to the cold climate in the stock market where investors choose less risky investments, e.g. companies that have a longer history of already positive cash flows. Nevertheless, in view of the fact that the company continues to develop well, it is remarkable that the market cap does not follow. OrderYOYO is today valued at approximately 4.5x ARR, for a company that has grown its ARR by ~60x from mid 2016 and continues to deliver, which is why we believe that an investment in OrderYOYO invites to a great risk-reward”, says Analyst Group.

EBITDA Before Other Non-Recurring Costs In Accordance to Guidance

Regarding the total staff costs, these amounted to approximately DKK -62.9 (-34.2) during 2021, corresponding to an increase of 80%. The increase is particular due to IPO related staff costs including cash settlements of warrants and other non-recurring costs such as severance, which is why we do not make any major changes to our prognosis. Adjusting for non-recuring staff costs, the general staff costs in 2021 represented 42% (DKK 45.9) of net revenue, compared to 42 % in 2020 (DKK 31.8), which is slightly better than we expected. Considering that parts of the increase in the total staff costs are of a non-recurring nature, we view positively that OrderYOYO has developed with good cost consciousness. The external costs amounted to 45.9 in 2021 compared to 22.7 in 2020, corresponding to an increase by 102%. In 2021 the company has invested heavily in its product offering and improved the value proposition for the Restaurant Partners by increasing the marketing efforts and digital presence, which is the main contributor to the increase in external costs. The earnings of primary activities before financials, tax and depreciations & amortizations amounted to DKK 0.7m in accordance to guidance compared to DKK 9.7m in 2020, due to increased investments in OrderYOYO’s Restaurant Partners and markets.

Our View of OrderYOYO’s future

During 2021 OrderYOYO has experienced solid growth in ARR from both existing and new Restaurant Partners. Equally important, MRR churn per quarter has been falling through the last year, proving that once Restaurant Partners implement and receive orders through the Company’s solution, the churn rate decreases. In 2022 and forward, Analyst Group believes that OrderYOYO will continue to execute on its current road map through increased investments in product offering to drive end-user lifetime value, and continue investing in market leadership within its current markets UK, Denmark and Ireland, simultaneously as the Company scales up its market expansion in Germany. Analyst Group expects OrderYOYO to continue to increase the number of Restaurant Partners in all main markets and pursue its focus on securing end-user revenues for new Restaurant Partners, which is estimated to yield a positive churn development and thus also a higher ARR.

OrderYOYO has decided to strengthen the company’s capital reserve and bring the liquidity position above DKK 100m. OrderYOYO will thus increase its share capital through a private placement securing DKK 40m and through an additional long term loan facility of DKK 40m. Vækstfonden Damgaard Company (owned by Preben Damgaard, chairman of OrderYOYO), is one of the investors in the private placement and provides the loan facility, which sends an important signal and instills confidence. With a strong capital reserve, Analyst Group expects that the company will make more strategic acquisitions in the future to continue to strengthen its European market leading position and create shareholder value.

We will return with an updated equity research report of OrderYOYO.