Frontier Digital Ventures (ASX:FDV) 1H18 results


by Rachael Jones

Frontier Digital Ventures Limited (ASX:FDV) Founder & CEO, Shaun Di Gregorio talks 1H18 results, growth in Asian online classifieds and the company's strategy of partnering with entrepreneurs and high-growth business.

Rachael Jones: Hello, I'm Rachael Jones for the Finance News Network. Joining me today from Frontier Digital Ventures is founder and CEO Shaun Di Gregorio. Shaun, welcome to FNN.

Shaun Di Gregorio: Hi, Rachael. Thanks for having me.

Rachael Jones: So, first up, Shaun, could you start by giving us an introduction to your company?

Shaun Di Gregorio: Sure. Frontier Digital Ventures invests in online classifieds in emerging markets and frontier markets, so, more typically, online property classifieds, so I think about, but in emerging markets, and sites like, but in emerging markets as well. Our model's really straightforward. We've been at it for about four years now, and prior to that have spent almost the last 18 years in online classifieds, so, it's an area we know really well.

Rachael Jones: Thanks, Shaun. Now, before we get on to talking about your portfolio, could you set the scene for the markets that you are in and how the online classifieds may differ.

Shaun Di Gregorio: Yeah, so we in markets in parts of Asia, what we call developing Asia, which is Asia ex India and China. Markets like Philippines, Vietnam, Myanmar, Sri Lanka, and as far as Pakistan. We're in some markets in South America. So, we're in very select markets like Uruguay, Paraguay, and in Central America as well, and we have some limited small investments in parts of Africa and North Africa. It's quite widespread, but they're very similar markets in that they're all emerging and frontier markets. I guess the fundamental difference for us is that these are high growth markets, and the classifieds model's a bit different, whereby you can go into the websites and not just find a house or a car, but increasingly able to go to the website and actually purchase the house and the car, so it's a little bit different, I guess, what we know here in Australia.

Rachael Jones: Thanks, Shaun. Now let's take a look at your first half 2018 results. What were the highlights for the financials?

Shaun Di Gregorio: Yes, so our half-year revenue was up just on 60 per cent year on year, so that was a great result for us. We completed a successful capital raise in the first half as well, and if you look back over the last two years since we've been listed, our revenues up to the middle of the year have actually tripled, so our portfolio revenues have tripled in that time, and our percentage EBITDA loss continues to reduce. So, really good half for us on a financial basis.

Rachael Jones: And how about your operations?

Shaun Di Gregorio: We look at each individual business. There are 15 businesses that we've invested in, and all of those businesses had really strong halves. We had some businesses in Asia particularly that are progressing really well, and that just means that they're signing up more advertisers, they're getting more audience to their websites, and generating more leads for advertisers. That bodes well for the health of the portfolio, so it was a really good half for us.

Rachael Jones: And now let's talk about the strategy. Where are you heading and how has progress been to this point?

Shaun Di Gregorio: We set out to identify opportunities to invest in frontier and emerging markets in those classifieds verticals. We partner with local entrepreneurs and we generally buy a minority part of that business. As that business grows, we like to acquire more and more of it, and then of course, ultimately, I think in conjunction with those local entrepreneurs, we'll look to find an exit at some point in the future. So, we're very aligned on that front, and probably halfway through the journey at the moment. We're still very much in the build the business model, and working with the local entrepreneurs to grow their business and make it as successful as possible.

Rachael Jones: Now to the last question, Shaun. What can investors look out for over the next six months.

Shaun Di Gregorio: Look, we spent that last couple of years building our portfolio. We've invested in a few new companies. Probably not going to see a lot of new investments from us, a lot of focus on our existing portfolio, and that just means getting all of our partners that we've invested in to continue to grow the core metrics of the business. If you're in a property portal, generally means getting more agents and more property developers to advertise on your website, getting more people to look at your website, and generate leads to those advertisers. So, we're very focused now on the existing businesses we've acquired, and hopefully they grow successfully and we can buy a bit more of them as time goes on, and as I said ultimately look to work with the entrepreneur to engineer an exit at some point in the future. See, our strategy is very simple, very clear, and we're just focused on execution now.

Rachael Jones: Shaun Di Gregorio, thanks for the introduction.

Shaun Di Gregorio: Thanks, Rachael.


Rachael Jones

Finance News Network
Rachael comes to FNN after working for Fairfax Media covering international breaking news, including the global economy and politics. She joined FNN in February 2018. She has reported on Australia’s finance news for various organisations since 2000 and has also interviewed a number of key business players, including Bill Gates. Rachael has also worked across a number of countries, including the UK and the US.