UPDATE: Minnow GeoOp eyes NZX main board

Hamilton Hindin Greene Director at Brokerage Grant Williamson
GEOadd to my Stocks
GEO GeoOP Limited
$0.180
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Volume: 500

GeoOp [NZAX: GEO], the workforce management app, is looking to migrate from the New Zealand Alternative Index to the NZX main board.

The Auckland-based company plans to apply to the stock exchange operator to graduate from the minnow bourse to the main board, it said in a statement. GeoOp shares jumped 18% to a month high of 47c, on turnover of $12,000 and at a fraction of its September 2013 peak of $4.49 and less than half its $1 listing price in October 2013.

"The company has been a very disappointing performer on the market since it listed and there's not a lot of investor interest in the stock," said Grant Williamson, director at Hamilton Hindin Greene. "That can certainly grow over time if it can turn around its performance but the move from one board to another for a small cap stock like this won't have too much effect – certainly in the immediate future anyway."

GeoOp is foregoing profits and dividends as it invests in product development and chases customers. The company is counting on capturing market share through the growing use of smart phones, where its app can be used by small and medium sized enterprises to manage their workforces.

Today's share price gain values GeoOp at $12.9 million, making it the 10th largest stock of 20 listed companies on the NZAX , which is being replaced by the NXT small cap momentum stocks market that NZX is developing. A move to the main board would make it the 12th smallest out of 127 companies, in between NZ Windfarms and Moa Group.

"Unless it is going to grow very quickly, it is probably not the best candidate to be on the main board," Mr Williamson said. "Should a company that size be on the main board of the market?"

The nascent NXT market targets small-to-medium sized enterprises with a less onerous disclosure regime and lower listing costs. Currently G3 Group, a mail services business, is the only listing on NXT, which launched last month and is intended to replace the alternative index, forcing all NZAX-listed firms to consider their future listing platform.

Mr Williamson said a move to the main board might see wider investor attention for the stock but the underlying performance of GeoOp was what counted.

GeoOp, which is in the middle of shifting its balance date to June 30 from March 31, said its loss increased to $4.87 million in the 12 months ended March 31, from a loss of $4.59 million the year earlier. Today it reported a 72% increase in annualised revenue to $1.4 million at June 30, from a year earlier.

In May the company flagged it was considering options for a capital raising, and today said "no firm amount or structure has yet been determined, the board expects to update shareholders in due course." At March 31, the company had $2.5 million in cash and short-term deposits, down from $4.5 million a year earlier. The company raised $10 million at $1 a share in a private offer before listing on the NZAX in October 2013.

GeoOp didn't respond to BusinessDesk inquiries.

(BusinessDesk)

BusinessDesk receives funding to help cover the commercialisation of innovation from Callaghan Innovation.


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22 Comments & Questions

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So they have 6-8 months of cash left. This is mad. They have less than 1M revenue, losing 4.7M and worth 12M....and have halved the shareholder value at listing.

It would be an embarrassment to have them on the main board.

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The article is misleading when it says "At March 31, the company had $2.5 million in cash and short-term deposits, down from $4.5 million a year earlier". At March 31 2014 they had $7.7m in reserves including government bonds they cashed up during the year.
This means they burned cash at more than $400k per month over FY15. Even if they take the axe to costs it's hard to see them not running out of cash well before Xmas. They desperately need fresh capital!
I can see only two reasons why they would choose the main board over the NXT
(i) they think being listed on the main board makes them more attractive to investors
(ii) being on the NXT means mandatory analysis, being a small co on the main board avoids such sunshine

Here’s a comment I made in an earlier post to an NBR article on Geoop.
Worse still the statement they made when they announced the strategy that "The Company remains on track with original disclosure documentation" to the NZX is bull. Their average monthly revenue in FY15 was less than $6/user compared to a projected $20 in the original disclosure document. Given who their chairman is they should know better than making statements so patently untrue, and why isn't the NZX monitoring this sort of behaviour!
Perhaps it's a bit of both.

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They are making a loss of around $5m a year, so that ties with your number around cash burn, cannot see too many non cash costs.

So at that burn rate they have 6 months from end of March = end of September, so 2 months left, unless they have raised debt.

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Great NZ Tech company. Leanne has secured investor from the US.
Weldon was Director of NZX! it will be listed on the NZX then later the ASX.

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Para 5.1.3 of the NZSX/NZDX listing rules make it clear that GeoOp is very unlikely to qualify for listing on the main board:
"An applicant for Listing on the NZSX with an anticipated market capitalisation on Listing or [sic] $50 million or less who is either eligible for listing on the NXT Market, or who is listed in NXT Market at the time the application is made, will generally not be considered for Listing on the NZSX."

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Mark Weldon was the "Director of the NZX "he incorporated alot of changes remember.. Mark is also director of Media Works which is all great for GeoOP's future.

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Extremely Happy Investor - it would seem pretty obvious, even to a casual observer like I, that you either work for Geoop or stand to gain with a slight increase in price. So give it a rest.

I admit that reading the numbers is interesting - that cash burn rate without any additional capital means that they will be gone within months. Potentially a bridging loan is in the wings with SVB on the hopes that a white knight VC rides in. With a bubbling capital market in the US that is possible, but at what cost? With a money burning machine like this it would have to be a majority stake - what happens then?

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We were new to Xero and GeoOp was promoted to us. Although the concept did change the way we did the business the app is short sighted and we soon found ourselves having to double handle things including the clunky Unleashed integration. We migrated at great expense (to us) to SimPro. It's a great solution which gives a full growth path not a narrow minded solution built on hype. Plenty of other solutions around like GeoOp so I fail to see how they are ever going to be a huge success. They have no point of difference. https://www.getapp.com/operations-management-software/a/geoop/alternatives/

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GeoOp is far superior to Simpro Simpsons Bart App ?
There are a few low quality apps out there competing just miles away from GeoOp's advanced integrated application for business.

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Simpro Simpsons Bart App? Really? Desperation! You need to do your home work on just the features. I hope for your sake you are actually not an investor as I'm thinking they will be dead in weeks.

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What a desperate comment. Simpro Simpsons Bart App? Really? ROFL.

You just need to look at the feature set to know that Simpro is more superior.

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Looks like a failing company is not the focus of the main person who took it to IPO and spent the money.

Let us all hope Velpic is a success for you kiwi investor.

http://m.theaustralian.com.au/business/companies/former-xero-exec-leanne...

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GeoOP is a successfull company. Leanne is on many boards around the world because of her success with Xero and GeoOP. Leanne and Mark Weldon have each a million dollars invested in GeoOP.

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Leanne was supposed to be heading up the US expansion. GeoOp didn't even bother going to Denver XeroCon. GeoOp has halved the shareholders investment, has a massive churn rate, lost $4.7 last year and turns over less then an Auckland coffee cart. Obviously success perspectice is objective.

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GeoOP only costs less than $20 per user to run a business effectively! The thousands of dollars for a business to set up Simpro is crazy?

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If you run a small company with one or two staff, do not need asset management, do not need inventory control then a cheap solution like GeoOp is great. If you run a real business with a real turnover (more than GeoOp) then you need a real solution. The money for set far out weighs the time saved in productivity, reporting, lack of double handling etc. I would say our investment has been returned at least 5 fold. You pay for what you get.

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I have setup both GeoOp and Simpro. The setup cost for any solution is based on time. Either the customer spends their time doing it, hopefully getting it right, a bookeeper or systems integrator or with a company like Simpro. Since GeoOp lacks assets, stock or inventory control there is obviously less setup. To say there is none, little or promote do it yourself is just irresponsible. I don't promote GeoOp anymore.

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GeoOp is huge in Australia with Telstra partnership connecting with business customers. New Zealand is a small market but this will change with the IRD wanting to keep an eye on tradies business eliminating the huge cash economy. GeoOp is a great economical solution for Government business and revenue.
Too Easy !

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As an accountant it is my job to advise companies. If GeoOp was my client I would advise to stop immediately and give back the current cash to shareholders. Why?

GeoOp has never made a profit. You will argue Xero but please don't, will just show your ignorance.

GeoOp has lost its innovation factor years ago and now competes in a crowded market.

GeoOo made the massive mistake to aggressively drop prices rather rather increase pricing, focus on verticals and create a truely great solution.

Its competitors are leaner, many cases already profitable.

GeoOp has very limited cash reserves left and seems to think that they will get tens of thousands of users magically to fill the massive cashflow requirements.

GeoOp spent over six million last year. Yes six million, and has under $1.5 million revenue to show for it. I have customers with 3 or 4 staff that have a larger turnover.

GeoOp has not ever proved its business case. If we do x we will make y.They seem to be lost in the hope of massive user multiplication.

GeoOp is lead by people who have no understanding of the industries they supposedly cater to.

Face the facts GeoOp. PR, hype and media can only get you far. Leanne, sorry to say the time was right for Xero but you can't replicate on just any dog and pony show.

PS learn the difference between users and customers.

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Kiwi's are so Negative about business and small minded.
GeoOp is booming here in OZ !
Australian Accountants embrace and love GeoOp with Xero that are a great solution for Australia's large trades and small medium business.
Embrace great Technology companies they are the future.

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Yet another feeble attempt by GeoOp PR? There is a big difference to being negative and outlining the facts of a company which simply is not performing.

The fact remains, GeoOp, the founders of GeoOp profited from selling their shares at the expense of IPO shareholders.

A little bit of honesty from the GeoOp camp rather than misinformation would go a long way. As you can read from the comments on this article alone, those with half a brain can see through the rubbish and are over it. I am surprised that they have not been picked up on it.

This one company is giving the NZ tech industry a really bad name. Well done GeoOp!

GeoOp might have a good user base in Australian, however retention rate is very low.

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GeoOp should list on the Australian ASX !
Australia has the most GeoOp business and customers.
The TELSTRA partnership with GeoOp is massive !

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