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Family Zone (FZO:ASX)

Flash note – Strong quarter as client base grows

1 Video - Jan 18

Family Zone Cyber Safety (ASX:FZO) is the first company to develop and implement an ecosystem approach to parental control and cyber safety for children at home, at school and on mobile devices. The company has released a positive quarterly report, highlights of which include the following.

  • Revenue $2.1 million  (62% increase QoQ  – includes $1.6 million in grants)
  • Paying subscriptions 30,000 (100% increase QoQ)
  • International subscriptions 5,000 (+400% increase QoQ)
  • Partner schools 120 (90% increase QoQ)
  • Contracted schools 582 (98% increase QoQ)
  • School Zone networks 574 (91% increase QoQ)
  • Cash balance $7.8 million as at 31 December 2017

Analyst comment: the focus for Family Zone during the past year has been continued expansion and adoption of its respective platforms, both domestically and abroad.

We see the most critical aspect to measuring this success as growth in the number of paying clients/users; in recent years we have witnessed numerous other companies in the technology sector having what appeared to be great ideas and a large number of users or downloads, this did not translate into clients, which typically resulted in these companies’ undoing.

Pleasingly, Family Zone has surpassed expectations, with the number of paying accounts exceeding 30,000 during the past quarter. This exceptional result has translated into growth of 114% compared to the previous quarter (September quarter – 14,000 accounts) and 172% growth (June quarter –11,000 accounts) since Family Zone’s initiation just over six months ago. We expect this rapid growth to continue in the coming year as the company continues its growth here and overseas.

Looking to the quarter ahead, we anticipate further growth from the number of paying accounts, as well as an expansion in the number of partnering schools (currently 120) as the new school year commences in Australia and New Zealand.

We also anticipate an update with respect to Family Zone’s telecommunications strategy, particularly with the launch of its white-labelled ‘Family Protect’ product in partnership with Telcomsel, one of the world’s largest telecommunication providers. And, while we do not forecast significant revenue from Family Zone’s telecommunication partnerships during the next several years, we do see this area as especially important to the company’s long-term success and growth strategy, in overseas markets in particular.

The information in this email should not be the only trigger for your investment decision. We strongly recommend you seek professional financial advice whenever making financial investment decisions.

Valuation: we have reduced our valuation for Family Zone to $1.24/share (previously $1.33/share), due to increased dilution from the recently completed $5 million capital raising.

Quarterly Update

1 Video - Oct 17

Interview with management on the September quarterly results.

Valuation update

1 Video - Oct 17

we have increased our valuation for Family Zone to $1.33 /share (previously $0.84/share).The major drivers for this were reducing our discount rate to 13.3% (previously 18.5%) and increasing our revenue assumption (1% LT uptake – 2022) for the Asian telecommunication carriers only (the previous assumption being nil revenue for telecommunication carriers). We will reassess this again as the Telkomsel partnership matures.

Linewize acquisition – Management update

1 Video - Oct 17

Family Zone has announced it has signed a Share Sale Agreement to acquire 100% of the shares of Linewize Services Limited.  We discuss this transaction and the benefits for FZO shareholders with Managing Director, Tim Levy.

Management Update

1 Video - Aug 17

Interview with management to discuss activities during the past quarter.  Key topics discussed include:

  • Financial and sales results;
  • New partnerships;
  • Recent capital raising; and
  • Targets for the upcoming quarter.

Initiation Report

10 Videos - Jun 17

Family Zone is an ASX listed company that has developed a comprehensive cyber safety platform that has been rolled out in schools and in family homes across Australia.  This report includes:

  • Valuation, investment and risk analysis;
  • A number of management interviews, which discuss the company’s business model and the role of the cyber experts; and
  • A review of the parental control industry, highlighting key online risks to children, the size of the industry and future growth potential, as well as comparing Family Zone’s ecosystem solution to other products.

Valuation Analysis

1 Video - Jun 17

Valuation Analysis for Family Zone of $0.87/ share.  This video discusses the key assumptions used to determine our valuation.

Business Model

1 Video - Jun 17

Discuss with Managing Director, Tim Levy, to explain the company’s business model in further detail.

What is a Cyber Expert?

1 Video - Jun 17

Family Zones sets itself apart from it’s competition with their team of cyber-experts.  We talk to one of Family Zone’s cyber experts, Jordan Foster, what is a cyber expert and why does Family Zone have a variety of cyber experts to chose from.

Parental control industry – Current products

3 Videos - Jun 17

The parental control market is quite fragmented with vastly different products offered by different providers. This video reviews the current offerings and identify’s how FZO ecosystem approach addresses many of the industry’s shortcomings.