Interview with My Rewards International (ASX:MRI)

My Rewards (ASX:MRI)

We spoke with David Vinson, Chairman of My Rewards, about the opportunity his company is now addressing as a global provider of rewards, recognition and loyalty programs.

With over 4.6 million members with more than 4,500 global, national and local suppliers, MRI is well placed as companies seek to provide a way to reward their employees and customers in an environment where cost of living changes make such programmes very meaningful.

See full transcription below.

 

 

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Transcription

 

Stuart: Hello, and welcome to Stocks Down Under. My name is Stuart Roberts, and I’m one of the co-founders of our publication. And joining me from Melbourne on Thursday the 14th of July, 2022, is Mr. David Vinson, who’s the chairman of My Rewards International ASX: MRI. David, good afternoon.

David: Good afternoon, Stuart. Great to be with you today.

Stuart: Yes. Now, now is a good time to be David Vinson because you have built one of the world’s preeminent loyalty in membership programs here in Australia, but with a global audience of potential users.

David: Absolutely. So, it’s been quite a journey. We started with humble beginnings as literally a tear-off coupon book more than 20 years ago and transitioning with the advent of technology through to web-based then into apps. And in the last five years really accelerated the technology basis on which we provide our programs, and that’s allowed us to participate now in really a global market. As we’ve disclosed, we’ve got a contract with Ria Financial, which is one of the largest money transfer companies in the world, and we’ve contracted to run their global program, which will reach 30 million users in 26 countries. And from that point of view, we’re very confident that we’ve demonstrated that we have robust systems and we can participate on a global basis.

Stuart: Right. Now, companies have been offering rewards to their customers, or their employees, or both, since time immemorial. What’s the unique offering that My Rewards can bring to companies as they wanna grow their own programs?

David: So, one of the key things that we do, Stuart, is we highly customize our solutions per client, so it’s not a one-size-fits-all approach. We have a core software that’s able to be very quickly adapted to what a company wants. Everything we do with companies in the B2B space is under their branding. We sit behind that in terms of providing them the front-end in their colors, their look, their brands, in effect, it becomes their program that they’re offering, whether it’s their employees or members. And what we’re able to do is customize that very quickly. We’re talking, you know, potentially one or two months to create a program. And then even within the program, the offerings in there can be highly customized.

If it’s a Telco, we can take out competing Telcos. So, we have the ability to provide the programs for the users that doesn’t compete with the client itself, and we can do that very easily, and we can also allow clients to drop in their own specials and house them in the same portal. So, effective really, we provide a corporation the tools to which they can effectively have their own fully customized program. You know, whether it be benefits, rewards, recognition, points-based programs, we are very flexible in that area.

Stuart: So instead of me having to hire a whole bunch of professionals in this field, I can turn to a specialized company and do that and be up and running in no time at all?

David: Correct. And that’s, you know, over the years we’ve generated over four and a half thousand different suppliers. We’re heading towards 8 million SKUs on our system stock-keeping units in terms of different products. We’ve got AI embedded in there to help people with recommendations, and you may also like situations to help promote more sales. We’re also allowing then for advertisers to come in and promote their goods and use that as a way to increase their revenue as well.

Stuart: Right. Now, what I’ve liked about the news flow from My Reward since you went public earlier this year, is these are some of the biggest names you’ve never heard of. So, at the barbecue this weekend, if I talk about Ria, I suspect no one will know who I’m talking about. And yet you are talking of money transfer organizations in the top 5 globally with about 30 million end users across multiple jurisdictions. That’s a big contractor that you’ve secured.

David: Absolutely. I’ll say, it demonstrates the robustness of our system. I mean, having said that in Australia we have Telstra the largest telecommunications company.

Stuart: Yep. We’ve all heard of him, yeah.

David: We’ve got MLC, one of the largest superannuation companies in Australia. We operate a program for LSH motors, which is the largest Mercedes dealer in the world. We’re dealing with…we launched a Wyndham destinations reward program. Wyndham’s the largest timeshare group in the world, a New York-listed company. So we definitely have some very strong blue chip clients that we work with and that all…separate from that, comes down to we have over 140 corporates that we deal with. And some are smaller local companies. Generally, a company that’s looking to either reward, retain their employees or members, we provide solutions to do that.

Stuart: Right. And as I’ve been telling people, now’s a great time to be doing that. Inflation rate in the U.S. came in last night in excess of 9%. Here, it’s running at 5% at least on the last numbers, it could be a lot higher. So, everyone’s looking for a way to give back to their customers at the point where inflation is, unfortunately, taking away from them, not to mention their employees, and cost of living. So, you must be enjoying a much more receptive audience even, than a year ago in that respect.

David: Absolutely, Stuart. And I think that area, I think we definitely wanna highlight to parties interested in what the company’s doing, and that in effect could be counter cyclic. And if you look at us as being technology-based company, I think if you look at the tech wreck that happened in January, we listed in February…

Stuart: Which unfortunately you’ve been a victim of, albeit temporarily.

David: Correct. And I was gonna say, there’s no point hiding from the fact no one’s happy with where our share price is. And our job here, whilst we’re gonna run the business, but also we have over 500 shareholders we have to be very mindful of. And we’re aiming, with what’s happening now in our business, to grow that and get the support to move the share price to build value in the company. We’re doing that because as you said, we’re almost counter-cyclic to some of the poor issues happening in the economy. A lot of people are feeling very negative about what’s happening, we’re actually quite positive.

And that is, as you mentioned, we provide a program that can save a family nearly $5,000 a year in everyday spending, whether it be supermarket, whether it be everyday spending at a restaurant, at a cafe, discounts on getting your hair done. So we feel that’s an extremely valuable product that could be offered. At the same time, as I mentioned before, our products offer a company, the ability to help retain employees or members or help acquire them. And again, in this current environment where literally 3.5% unemployment, it’s very difficult to retain employees.

They can move drop of a hat. The great migration as they call it, or the great resignation, we have programs that can help retain and attract employees, and also make a company feel like they’re offering their employees some really additional value over and above what might be some pressures on pay rises with the CPIs you mentioned, it’s very difficult for a company just to blanket to go and…you took the American example, go and give a 9%,10% pay rise. It’s very challenging in the current environment. With our programs, we can in fact give the equivalent of something close to that by the savings that we offer. And that’s where we feel, you know, since listing we had a lot of interest. We’ve signed up a number of good contracts that we’ll be detailing in the near future, we’ve got a great pipeline. So we’re very upbeat about the prospects of the company, albeit what looks like a depressed financial economy.

Stuart: Sure. Talk to us for a moment about how My Rewards makes money out of these programs. Presumably, there’s a subscription basis, and you also clip the ticket from usage by the beneficiaries of the programs. What else is in there for you?

David: So if you’re looking at some core margin revenue, that’s the membership side, and that’s, again, very pleased with some of the recent contracts we’ve got that will grow that membership revenue, which is very high margin for us. The turnover we had, which is over $30 million in revenue is very at the currently quite low margin. There’s a lot of gift cards, movie tickets in there that with the competitive nature of the market, are very low margin. So, one of the goals that we detailed in our prospectus is that we wanna, one, get more members, which we’re doing, two, activate the members that we have to actually then buy more products and services with an increased margin. So, there’s been a lot of work in the last few months to build how we can build our margin, build our product set. That’s where the artificial intelligence comes in. Where someone can buy one product and we suggest another product that should go along with that. So we increase the sales but make sure there’s a margin on that sale.

So that covers two elements. The third is advertising revenues that we’re just beginning to see how we can increase, and that is by having customized programs. We’re getting to…an example would be Telstra employees. We manage a program to every Telstra employee in Australia. There are advertisers that would like to offer their goods and services to that base. We can start developing an advertising revenue to allow them to do that. We don’t give out any of our data, we’re very highly secure in that respect, but they can embed a promotion within our program that goes to the Telstra employees in that example. So, we feel that’s another area we have very good growth prospects that we’re just starting to work on, and that becomes the three revenue streams. You look at membership revenue, which is high margin, increased sales that we will build from a low margin, and then build our advertising revenues.

Stuart: Right. This is a company that you’re one of the co-founders of, best part of a couple of decades ago. And you hinted at the start, it’s been a major evolution through the process starting from plain old gift cards that, you know, we used to use through to the sophisticated offerings now. What’s helped you to pivot through all those changes in the way we do loyalty?

David: Look, the key thing is keeping up with the market. We’re very fortunate that our managing director, Maitreyee Khire’s come into that position. She’s been with the company for over 11 years. Starting from literally selling tickets on a part-time basis, and worked her way through every aspect of the company to then being the largest shareholder now, and the managing director. And really, the key thing is, about six years ago, is pivoting to a more highly technical solution, understanding corporates need high security, you know, whilst we’re a shopping-type service, people might think, “Oh, well, you don’t have to be that secure,” but in fact, in today’s world…

Stuart: Oh, they’re the easiest data breaches to secure.

David: Correct. And people tend to use the same password for their bank that they might for a shopping service. So, we’ve been consistently altered it to make sure we meet the standards. And from that perspective I think, spearheading the growth of the company into what is a very high-tech world, but high security, high dependency on delivering proper solutions. And I think moving with the market, you know, if I had to say one thing, we’re very adaptive, and seeing what the market’s evolving to, and we’re evolving with it. So, if we didn’t evolve, we’d be trying to sell tear-off coupon books. I think that’s really the nature of our business, is to see what’s happening around the world, and adopt some of those strategies, and invest in the technology, which we have. We’ve got a lot of investment in that to make sure we can meet the demands of what clients are looking for.

Stuart: Right. Reminds me of that great entrepreneur Sir Frank Lowy, “If I’d stuck to my knitting, I’d still be making the best cappuccino in Blacktown.”

David: That’s it.

Stuart: So, David, you and some of your boardroom colleagues were buying heavily recently. Obviously, the market punished your stock as it did just about every other tech stock, not to mention recent listings. You’re seeing some pretty good growth ahead, right? Without giving anything away that for sure…

David: [crosstalk 00:12:13 ] from a business perspective. And again, our plan is over the coming months to demonstrate to current shareholders and also new hopeful shareholders coming in, that in what is a very tough environment, you’re looking now, very difficult to get listings away, people are sitting on cash saying, “Well, maybe things will go lower.” So, you’re finding it a really tough period at the moment for smaller companies. And let’s see where we are, we’re a small micro-cap. And, you know, as I said, very difficult if you are looking to raise money.

We’re fortunate, we announced with AMRAM financial services group a line of credit $3.5 million, so that means we’re well secured in terms of funding. And I think we can demonstrate that whilst it is a tough market…and as I’ve said before, in terms of being counter cyclic, that we’re gonna have some great growth going forward that should see us build margin, demonstrate our pathway to profitability. I think that’s another key change in the last year is, during the COVID period, there was a lot of waiting on revenue growth, and not so much on bottom-line profitability growth. Since January, I’d say that has been a complete flip back to, like, “Show me your profit or profitability prospects.”

And so, we’re caught…one sense we’re at the trail end of the revenue, we’ve good revenues, and we have plans still to do for good profitability. But the waiting now from investors is, “I’m not so interested in the top line. Show me and demonstrate to me that you have a pathway to profitability.” And that’s really what we’re doing, we’ve announced cutbacks, we’ve trimmed ourselves to match the harder market. And, hopefully, shareholders can say that we’re listening to what they’re needing to do, growing the business while reducing overheads at the same time has gotta be very positive for the company.

Stuart: All right. David Vinson, well done to what you and Maitreyee and the other members of the My Rewards team have achieved in the period since listing, and here’s to some more business ahead.

David: Thank you. And I really appreciate the opportunity to share our story with you.

Stuart: Thank you.