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While the COVID-19 pandemic has had a severe impact on several businesses across the globe, there some that have benefitted from the coronavirus spread.A number of companies have had to withdraw their full-year guidance due to the growing uncertainty surrounding the infectious disease. However, some companies are thriving in the current scenario.
The abrupt closure of markets, services and even schools and university campuses across the globe has necessitated businesses to look for alternativesfor their survival amid the current predicament. Due to the lockdowns in multiple geographies, people are restricted to their respective homes giving a few companies a new opportunity to explore. For example, companies in the education sector have seen a rising demand in online courses while food delivery businesses have witnessed a surge in orders for their services. Indeed, this is the time to applaud the usage of technology to meet the requirements of people.
For citizens, this is the best time to utilise online services and explore further opportunities,compared to the conservative approach of face-to-face interactions. By the looks of it, the turmoil caused by SARS-CoV-2 could change the style of working for some industries, including education, food delivery, and gaming, among others.
Midst the crisis, the Australian government, 31 March 2020, had asked to prioritise the online food ordering process for its citizens, especially the older generation. The government highlighted thatit is working with grocery suppliers on a priority basis to easeaccess to online and telephone shoppingfor people registered with My Aged Care.
Let’s deep dive into two ASX-listed stocks that are thriving on the lockdown situation and delivering a consistent performance despite the turbulence in the market.
OLL’s YTD Return stands at an impressive 34%
A software-as-a-service (SaaS) company, OpenLearning Limited (ASX:OLL) offers an online learning platform to education providers. Also, OLL provides a global marketplace of courses for learners at all levels.
With a consistent return of ~30% on the ASX index (as indicated in the table above), the Company has secured on-going plans for a promising future. Let’s have a look at such activities:
Agreement with High Resolves
OLL notified the market on 27 March 2020 that it had signed a SaaS (based on its usage) and reseller agreement with High Resolves which is a not-for-profit organisation. This is OLL’s first major expansion into the K12 sector.
High Resolves took this initiative intending to provide all their peak learning experiences via online channel starting next month while the schools are closed due to COVID-19.
As per the agreement, OpenLearning will charge an annual SaaS fee ranging from $50k to $90k from High Resolves. The fee is depended on its usage across all school portals by the number of students ranging from 15,000 to more than 30,000.
Every school having access to OLL portal via High Resolves can create extra courses at zero cost until March 2021.
To promote online learning, High Resolves mentioned that its sales force would encourage the retention of schools who will be interested in hybrid or digital experiences next year.
High Resolves is sponsored by the Department of Social Services of the Australian government, which had announced in May 2019 to allocate $6 million to the not-for-profit.
Partnership with Alibaba Cloud
On 19 March 2020, OpenLearning announced that it had signed a partnership agreement with Alibaba Cloud which is the data intelligence backbone of Alibaba Group, an internet giant.
By this partnership, the unique learners in mainland China which are more than 10,000 in number would be able to get high-speed access to its online courses.
Due to the coronavirus spread, the travel of international students to Australia is prohibited. Thus, universities are seeing the online platform as a measure to be used by students in mainland China as it is the largest source country.
Agreement with 13 new education providers
OLL had signed B2B SaaS agreements with 13 new education providers as announced on 18 December 2019. These education providers include colleges, universities and training providers delivering services to international as well as domestic students.
This was another important announcement regarding the extension of the Company’s product which had anticipated to start producing revenue in the first quarter of CY 2020.
OLL expected that the new contract would generate a minimum annualised recurring revenue of $80k in aggregate in the span of December 2019 to February 2020.
Other than the contracts mentioned above, the Company stated that it has a robust and advanced pipeline of potential clients located in Malaysia and Australia. Also, OLL expects to secure several additional contracts in the near term.
MMM’s YTD returns skyrocketed to 150%
Marley Spoon AG (ASX:MMM) is a meal kit service for home cooking. The Company was incorporated in 2014 and has operations in three primary regions: Australia, Europe and the US. In Europe, MMM caters to Austria, Belgium, Denmark, Germany, the Netherlands and Sweden. The three brands of the Company include Marley Spoon, Martha & Marley Spoon, and Dinnerly.
As an innovative step helping to reduce food waste, MMM makes meal kits that have pre-portioned seasonal ingredients and step-by-step recipes to cook healthy and better meals.
MMM’s revenue likely to be up 40% YoY:
On the one hand, businesses are laying off their employees, evident from the fact that 6.6 million Americans have filed for unemployment benefits. On the other hand, Marley Spoon stated that during this hard time, the Company is increasing its workforce on a global scale, thereby, offering additional jobs to people. The Company explained that they provide essential supplies to the community. Thus, along with a resilient food supply chain, MMM has the liberty of movement across borders of the European states.
Regarding the Company’s financial standpoint, the revenue is anticipated to be greater than EUR 42 million in the first quarter of FY 2020. The expected revenue is an upsurge of 40% as compared to the first quarter of FY 2019 pertaining to the growth in demand in the last two weeks of March. Additionally, for the same period, the marketing expenses and the cost for customer acquisition is significantly dropping. Marley Spoon is expecting to have a similar
trend in the second quarter of FY 2020.
The reassurance of Guidance 2020
Delivering a robust result for CY 2019 for the period ended 31 December 2019, the Company affirmed its guidance for FY 2020.
Key highlights of guidance 2020 are as follows:
- By the end of CY 2020, MMM anticipated turningthe operating EBITDA in the positive figure.
- Revenue growth is likely to be nearly 30% on year on year basis.
Key sensitivities for the above-mentioned guidance include,
- Scale and timing of investments in marketing to drive further growth
- Timing and rate of expected improvements in contribution margin
- Delivery timeframe of the predicted growth and synergy gainsfrom the partnership with Woolworths Group
Improvements made in 2019 are believed to have positioned MMM’s European business for growth in 2020. Another driving factor for the Company is it’sexpanding geographical reach. The launch of delivery facilities in Denmark and Sweden in October 2019 and January 2020, respectively have led to a broader customer base.
