Society Pass Inc. (Nasdaq: SOPA): Litchfield Hills Initiates Equity Research Coverage; SOPA Growing Rapidly and Nearing Positive EBITDA Inflection

Rhea-AI Summary

Society Pass Inc. (Nasdaq: SOPA) is a high-growth acquisitive internet services company offering advertising, travel, retail, telecom, and fintech services in Southeast Asia. Litchfield Hills forecasts positive EBITDA as SOPA shifts from its early growth strategy to a focus on profitability under its new CEO. The SEA market is the world's fastest-growing region due to a movement away from China, young, tech-savvy populations, and business-friendly governments. SOPA's main subsidiaries include Thoughtful Media Group, NusaTrip, Next Generation Retail, Gorilla Mobile, and Society Points. Litchfield Hills values TMG at roughly $88 million and NusaTrip at roughly $65 million. SOPA is expected to spin off both TMG and NusaTrip via Nasdaq IPOs in 1H 2024, generating significant shareholder value. Ray Liang, the Co-Founder and former CFO, was promoted to CEO in October 2023 and has adopted a strategy focusing on profitability. SOPA's revenue is quickly growing, and EBITDA nears breakeven, with positive EBITDA projected in 2025. Litchfield Hills values SOPA at $123 million based on an EV/Revenue multiple of 4.8 times its estimated 2025 revenue estimate of $25.5 million.

Market Research Analyst

The initiation of equity research coverage by Litchfield Hills on Society Pass Inc. (SoPa) indicates a positive market outlook for the company, particularly in the context of its projected shift towards profitability under new leadership. The emphasis on SoPa's acquisitive nature and its diversified presence across various sectors such as advertising, travel, retail, telecom and fintech services in the Southeast Asian market highlights the company's strategic positioning in a region characterized by a young, tech-savvy population and business-friendly governments. The projection of positive EBITDA by Litchfield Hills suggests a potential improvement in operational efficiency and financial stability which could be a significant driver for investor confidence.

Additionally, the mention of upcoming IPOs for subsidiaries Thoughtful Media Group (TMG) and NusaTrip could signal a strategic move to unlock shareholder value and provide a clearer valuation framework for these entities. The integration of technological advancements, such as the NusaTrip's platform upgrade and the synergy between its travel services and Gorilla Mobile eSim, reflects a forward-looking approach to enhancing user experience and operational effectiveness. The financial forecasts provided, with revenue growth and a path to profitability, offer a positive outlook that may influence investor sentiment and warrant attention from stakeholders.

Financial Analyst

SoPa's financial trajectory, as outlined by Litchfield Hills, is noteworthy for several reasons. The expected revenue growth from $9.2 million in 2023 to $25.1 million in 2025, alongside the forecast of reaching a positive EBITDA by 2025, highlights a robust growth strategy. This growth is underpinned by SoPa's diverse ecosystem, which leverages synergies across its subsidiaries to optimize its offerings and capitalize on the burgeoning SEA market. The valuation of SoPa based on an EV/Revenue multiple of 4.8 times its estimated 2025 revenue suggests a significant upside compared to its current market capitalization, which is approximately equal to its cash value.

The comparison to super apps like Goto, Uber and Grab, while providing a frame of reference, also underscores the competitive landscape in which SoPa operates. It is important to note that the company's ability to sustain high growth rates and achieve profitability will be critical in justifying such comparables. The strategic shedding of less profitable business units and the focus on free cash flow are indicative of a disciplined approach to financial management, which could be reassuring to investors concerned about the typical cash burn issues in high-growth tech companies.

Technology Industry Analyst

The technological roadmap presented for SoPa, particularly the upgrade of NusaTrip's Java architecture and the integration of Gorilla Mobile eSIM technology, demonstrates a commitment to innovation and improving operational efficiencies. The technology upgrades are expected to enhance the customer experience, which is crucial in the competitive online travel and e-commerce sectors. The integration of Society Points loyalty app across its subsidiaries not only aims to increase customer retention but also to drive cross-platform engagement and revenue generation.

From a technology perspective, the anticipated improvements and integrations across SoPa's ecosystem could lead to more seamless and personalized user experiences, thereby potentially increasing the lifetime value of customers. The technological advancements, combined with the strategic focus on core profitable segments, are likely to enhance SoPa's competitive advantage in the fast-growing SEA market. However, the successful implementation of these technology initiatives and the realization of the expected synergies will be key to achieving the projected financial outcomes.

NEW YORK, Dec. 27, 2023 (GLOBE NEWSWIRE) -- Society Pass Inc. (Nasdaq: SOPA) (“SoPa” or the “Company”), Southeast Asia’s (SEA) next generation, data-driven, loyalty, fintech and e-commerce ecosystem, announces that Litchfield Hills Research (“Litchfield Hills”) has initiated equity research coverage on SOPA.

Click Here (on Society Pass website) to view the full Litchfield Hills Equity Research Report.

Summary Points:
• Investment Thesis: SOPA is a high-growth acquisitive internet services company offering advertising, travel, retail, telecom and fintech services in fast-growing SEA. Litchfield Hills forecasts positive EBITDA as SOPA shifts from its early growth strategy to a focus on profitability under its new CEO.

• SEA Countries are Young and Booming and are Hottest Economies on the Planet: SEA market is the world’s fastest growing region over the next decade for the following reasons:
      1)   Movement away from China
      2)   Young, tech savvy populations
      3)   Business friendly governments

• Society Pass Ecosystem: SOPA’s main subsidiaries are:
      1)   Thoughtful Media Group (TMG) – Bangkok – digital advertising
      2)   NusaTrip – Jakarta – online travel booking
      3)   Next Generation Retail (NGR) – Ho Chi Minh City – online retail e-commerce
      4)   Gorilla Mobile – Singapore – mobile telecom/e-sim services
      5)   Society Points – Manila – loyalty points program

• Thoughtful Media Thriving with SEA Focus: TMG provides digital advertising services to companies utilizing social media platforms. Since July 2022 acquisition for $2.1 million, TMG had just 17 employees and $5.8 million of revenue in 2021 compared to 75 employees and $6.6 million in 2023. After attaining GAAP profitability of $750k in 2022 net income, Litchfield Hills forecasts revenue of $12 million in 2024 and $18 million in 2025. At 5x 2025 revenue, it values TMG at roughly $88 million.

• NusaTrip Provides Online Travel, Customized for SEA Consumers: Founded in 2013 and acquired in August 2022, NusaTrip targets SEA travel market and has onboarded 650,000 hotels and over 500 airlines globally via its app and website. It has direct links with travel global distribution systems and its core SEA ultra-low-cost carrier airline partners. NusaTrip’s new 17.0 Java software should allow for faster searches and more features as well as add Gorilla Mobile eSim travel data and the ability to earn Society Points in 1Q 2024. In April 2023, NusaTrip acquired Vietnam-based VLeisure, which is a B2B hotel management software company. NusaTrip generated gross merchandise value (GMV) of $60 million, before the pandemic. GMV recovered to $43 million in 2022 and has already hit $45 million for the first nine months of 2023. So, it should have a record year this year, and approach $100 million within the next two years. Litchfield Hills forecasts net revenue of $2.0 million in 2023 and $4.5 million in 2024 as well as 73% gross margin in 2024, rising to 76% in 2025. Applying a 5x 2025 revenue estimate of $6 million, Litchfield Hills values NusaTrip at roughly $30 million. Applying an ERG multiple of 38x, Litchfield Hills valuation increases to a $65 million enterprise value.

• Two Upcoming 1H 2024 IPOs: Litchfield Hills looks for SOPA to spinoff both TMG and NusaTrip via Nasdaq IPOs in 1H 2004, which should generate significant shareholder value for SOPA shareholders.

• New Management: Ray Liang, Co-Founder and former CFO, was promoted to CEO in October 2023 and has adopted a strategy focusing on profitability, even shedding F&B business units and scaling back its unprofitable online retail business. Corporate focus now is on getting to free cash flow positive (which Litchfield Hills expects in 2024) and profitability (which Litchfield Hills expects in 2025).

• Technology Roadmap: Key tech milestones are as follows:
      1)   Representing a massive leap in technology, by upgrading from its 2002 Java 1.4 architecture to the 2021 17.0 version, NusaTrip platform will run faster and more reliably and more easily add enhancements like hotel bookings and Gorilla eSim cards.
      2)   Integrating Gorilla into NusaTrip, travel eSIMs are a natural addition to the airfare and hotels booking business. So, Litchfield Hills sees this as a natural progression and group synergy.
      3)   Upgrading the Society Points loyalty app and integrating with Gorilla, Leflair, NusaTrip and Gorilla as well as opening loyalty platform up to numerous other merchants.

• Financials: Revenue is quickly growing, and EBITDA nears breakeven. Achieving its initial goal of rapid top line growth, SOPA has reduced its EBITDA losses. Litchfield Hills expects revenue of $9.2 million in 2023, $17.1 million in 2024 and $25.1 million in 2025. Litchfield Hills projects positive EBITDA in 2025, consuming less than half of the $8 million cash on hand until then. Unlike loss-making microcap peers, SOPA has the balance sheet to get to profitability.

• Comparables: As a super app, Litchfield Research argues that SOPA comparables are Goto, Uber and Grab. Averaging all these companies together, Litchfield Hills estimates 2.9 x 2024 estimated revenue multiple and 27.5x estimated growth.

• Valuation: SOPA has a negligible enterprise value as its market cap is roughly equal to its cash value. Given how well SoPa has deployed cash to date, SoPa has been a frugal buyer of assets, buying at low valuations. Based on an EV/Revenue multiple of 4.8 times its estimate 2025 revenue estimate of $25.5 million, Litchfield Hills values SOPA at $123 million.

About Society Pass Inc.
Founded in 2018 as a data-driven loyalty, fintech and e-commerce ecosystem in the fast-growing markets of Vietnam, Indonesia, Philippines, Singapore and Thailand, which account for more than 80% of the SEA population, and with offices located in Bangkok, Ho Chi Minh City, Jakarta, Manila, and Singapore, Society Pass Incorporated (Nasdaq: SOPA) is an acquisition-focused holding company operating 5 interconnected verticals (loyalty, digital media, travel, telecoms, and lifestyle), which seamlessly connects millions of registered consumers and hundreds of thousands of registered merchants/brands across multiple product and service categories throughout SEA.

Society Pass completed an initial public offering and began trading on the Nasdaq under the ticker SOPA in November 2021.

SoPa acquires fast growing e-commerce companies and expands its user base across a robust product and service ecosystem. SoPa integrates these complementary businesses through its signature Society Pass fintech platform and circulation of its universal loyalty points or Society Points. Society Pass loyalty program members earn and redeem Society Points and receive personalised promotions based on SoPa’s data capabilities and understanding of consumer shopping behaviour. SoPa has amassed more than 3.7 million registered consumers and over 650,000 registered merchants and brands. It has invested 2+ years building proprietary IT architecture to effectively scale and support its consumers, merchants, and acquisitions.

Society Pass leverages technology to tailor a more personalised experience for customers in the purchase journey and to transform the entire retail value chain in SEA. SoPa operates Thoughtful Media Group, a Thailand-based, a social commerce-focused, premium digital video multi-platform network; NusaTrip, a leading Indonesia-based Online Travel Agency; VLeisure, Vietnam’s leading provider of hotel management and payment solutions; Gorilla Global, a Singapore-based, mobile network operator; Leflair, Vietnam’s leading lifestyle e-commerce platform.

For more information on Society Pass, please visit:

Website at https://www.thesocietypass.com or
LinkedIn at https://www.linkedin.com/company/societypass or
Facebook at https://www.facebook.com/thesocietypass or
Twitter at https://twitter.com/society_pass or
Instagram at https://www.instagram.com/societypass/.

Cautionary Note Concerning Forward-Looking Statements
This press release may include “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this press release are forward-looking statements. When used in this press release, words such as “anticipate”, “believe”, “estimate”, “expect”, “intend” and similar expressions, as they relate to us or our management team, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in the Company’s filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph. Forward-looking statements are subject to numerous conditions, many of which are beyond the control of the Company, including those set forth in the Risk Factors section of the Company’s registration statement and prospectus relating to the Company’s initial public offering filed with the SEC. The Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

Media Contact:
Rokas Sidlauskas
Chief Marketing Officer
rokas@thesocietypass.com

What services does Society Pass Inc. (SOPA) offer in Southeast Asia?

Society Pass Inc. (SOPA) offers advertising, travel, retail, telecom, and fintech services in Southeast Asia.

What are SOPA's main subsidiaries?

SOPA's main subsidiaries include Thoughtful Media Group, NusaTrip, Next Generation Retail, Gorilla Mobile, and Society Points.

Who is the new CEO of Society Pass Inc. (SOPA)?

Ray Liang, the Co-Founder and former CFO, was promoted to CEO in October 2023.

What is the financial outlook for SOPA?

SOPA's revenue is quickly growing, and EBITDA nears breakeven, with positive EBITDA projected in 2025. Litchfield Hills values SOPA at $123 million based on an EV/Revenue multiple of 4.8 times its estimated 2025 revenue estimate of $25.5 million.

What are the upcoming IPOs for SOPA?

SOPA is expected to spin off both TMG and NusaTrip via Nasdaq IPOs in 1H 2024, generating significant shareholder value.