Justpark raised over £3.5m on Crowdcube in 2015. Now they are back for another £1.5m, although we expect the real target is much higher. So how does it stack up?
If you listen to the company, then its all going swimmingly. So let's not do that.
In 2015, they only gave historic figures for the financials expect for that year. Now again they only give historic figures, so a comparison is difficult. However, we do have one and that is for 14/15.
Revenue figures are spot on but its the gross profit and COGS that send out a more worrying message. Not of course a message mentioned in the current pitch.
COGS were £263k but actual COGS for that year were £371k. So that's a 41% increase in COGS for the same value of revenue. Gross profit likewise were £828k but were in fact £626k again on the same revenue - a considerable shift in GPM. The overall expenditure was below the expected level and this seesm to be as a result of employing fewer staff. This might in turn explain the high number of complaints at that time that the company couldnt be reached if there was a problem.
Now we do know that the company has had issues with service levels and this could explain the changes - but this is not explained in the current pitch. When companies ignore the obvious in an attempt to disguise issues, you have be a little worried.
Our main problem with Justpark, apart from the above is that they have no real control over the service they offer. The spaces are owned and controlled by the public - who are nothing if not unreliable. The issue of arriving at your space to find it either too tight, full or simply not there, with the owner unavailable, is one that appears too often in negative reviews. So if, for example, you cannot get parked you miss the wedding or funeral you planned to attend. To be fair the reviews have improved in the last year. But unlike Airbnb, the transaction value is very low so space owners do not really care. Justpark do compare themselves to Airbnb, which is a mistake.
So you have to ask can the company resolve this issue - clearly no as they have no control over it.
So can they live with it and increase their revenues by enough to make some money ie profit? Can they keep the GPM steady and stop the rise in COGS and operating costs above the level it currently sits at, against increases in revenues? That's the key balance and they have a long way to go to get to BE. Deals with Local Authorities and major property owners such as hotel chains will help - but may come as a discount to GPM.
The rest is for you investors to decide.
As a percentage of overall bookings, I think this problem is minimal. I have also seen a couple of real examples where people have been pleased with the final outcome in terms of how JustPark have dealt with it. JustPark are growing into a great brand in this space, and the financial gaps you report above are pretty minimal compared to others on this blog.
ReplyDeleteHm - not sure.It is a fundamental problem in my view. They do not control what they are selling. At the moment they are able to cope but at some stage it will become critical in terms of mass. You on the other hand(being either a SH or part of JP) are able to disagree.
ReplyDeleteLots of businesses these days don't control what they are selling - not just all the Airbnb type businesses but even bigger businesses like eBay and Amazon marketplace. That model does have major upsides in terms of keeping costs down as well as the downsides you refer to. I do however agree with you about the financials. Revenue looks pretty limited to date and I do wonder whether there is enough supply and demand to scale this into a decent business.
ReplyDelete