BikeExchange costs down and revenue up, Kitzuma makes big contribution

Australian stock exchange listed BikeExchange has illustrated in its 2022 financial year update how, under new leadership, the company is turning a corner following a torrid time since its listing in February last year.

The past 12 months have been a period of restructuring, most notably around acquisitions such as cycling logistics and assembly arm Kitzuma, plus staff changes that have brought down the headcount and other core costs.

Though bringing some short-term costs, changes relating to staff are now believed to have trimmed $5.5 million in expenditure during FY22, with further expense reduction planned outside of staffing.

The refocusing has intensified since CEO Mark Watkin stepped away from the business in May following successive months of share price decline. Ryan McMillan is now the new CEO, having formerly held the COO role. Kathy Kotsiopoulos is to become the CFO and Sam Salter the new Head of Strategic Partnerships.

At present the share price is trading at a 90% reduction to its IPO price near a 52-week low of 0.021. The share price responded positively to the firm’s update, up 5% as the ASX closed Tuesday.

The business may well be buoyed by its position as the world’s largest second-hand and shop partnership platform for sales. Consumers looking to take up cycling as part of a drive to keep costs down will find BikeExchange’s global offering to have plenty of listings, across all categories, usually at a favourable price and now with Kitzuma’s ability to service the delivery in some markets.

Overall BikeExchange group revenue grew by 41% for the financial year 2022, rising to $6.8 million, with most divisions of the business responding positively.

North American trading, in particular, is off to a strong start, up 137% comparable with the previous corresponding period. Here, the recently acquired Kitzuma showed its worth to the business, delivering $1.19 million in the second half of the financial year alone. Kitzuma is to launch a consumer shipment program to further enhance its offering and revenue capabilities.

Total transaction values, a key metric for the company’s profitability, rose by 22% with both volumes and value up.

While the cost control efforts remain underway, the business wasn’t able to fully tame outflows with $12.24 million more in cash going outwards down to payments to suppliers and employees. Net loss for the year increased from $11.12 million to $14.3 million.

To steady its balance sheet the company did raise $6.3 million in FY22 and has previously said that it will raise further capital to be focused on improving sales conversion rates. The business ends the year with $4.89 million in cash and cash equivalents.

CyclingIndustry.News reached out to BikeExchange this week with a view to confirming whether the second hand market is indeed bucking the trend with consumers making more cost considerate purchases. We hope to follow up shortly.