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Why Has Kyckr Quadrupled Over the Past Month?

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

Kyckr Ltd (ASX: KYK) is a reg-tech company focussing on KYC and AML compliance that acts as a source of intelligence on companies. They cover over 170m organisations, and their solution ensures that information is completely accurate when clients are onboarded. The way they access the data is through company registries, databases and searches, which are then uploaded to one database that Kyckr can sell to clients.

kyckr - report

Kyckr has been on a tear after Wisetech bought a 19.6% stake at 6.6c/share

One benefit of Kyckr’s model is the company’s SAAS style revenue. The company can continually develop its product offering, and will have more money to invest in the platform as more revenue comes in. This enables Kyckr to continually improve it’s offering by connecting with more databases and getting more data on companies. Profit margins are also very high over the long term, because variable costs are low which results in most revenue flowing straight through to the bottom line. SAAS companies often take a long time to get going but have high margins when they are established, which is why investors like them. The company can also help ensure that new clients onboarded are actually registered. Many of their clients were providing services to bankrupt companies that would never be repaid, and this solution would help those companies avoid that outcome as soon as it is known the company is liquidating.

The main disadvantage with Kyckr is the fact that their value proposition is not as hard to replicate as it is for most other SAAS companies. This means that the company could easily face increased competition in the future, which is something investors should be aware of. The company is also burning through around a tenth of their market capitalisation every year, so they will need to ensure good sales execution and keep the share price up to stop the positions of existing investors being diluted.




This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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