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Trax Retail

Computer vision technologies for retailers
Pre-IPO
Medium risk

Company’s value 2020-2021

Invest in Trax Retail

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Investment Idea Details
About the company

Trax has built the most advanced computer vision platform for the retail industry. By scanning merchandise with a mobile app and cameras installed in stores, retailers can track sales performance more effectively. The machine learning system helps retailers analyze and identify when inventory is low on store shelves, optimize allocation of products to meet customers’ preferences and predict future demand. Trax counts some of the world’s largest retailers as clients, including Best Buy and Auchan.

Many of the world’s top companies that offer consumer packaged goods (CPG) use Trax’s merchandising, in-store execution, shopping engagement, market measurement, analytics, and shelf monitoring solutions. Among them Coca-Cola, P&G, Nestle, Unilever, Bayer, Shell, Sanofi and other well-known global brands.

Founded in 2010 in Singapore, Trax dominates the market in its segment and was named one of the fastest growing technology companies on the Deloitte Technology Fast 500 list. It owns 23 patents and hubs in major cities around the world, including Moscow.

Market Opportunities

The global smart retail devices market was valued at $17.43 billion in 2019, and is projected to reach $74.68 billion by 2027, representing a CAGR of 17.2%.

In the last 12 months, 49% of retailers have invested in planning and demand prediction tools. This trend will only grow as retailers need to optimize costs in order to maintain the margins of their businesses because of the high competition among retailers and pressure from online stores. As far as the consumer sector goes, the adoption of AI technologies here is less than 40% (compared to 60% in the automotive and financial industries). This shows formidable AI expansion opportunities in this sector. Investments in AI technology for the consumer segment enjoy the highest projected returns.

In addition, the retail market is generally highly consolidated and dominated by major players. Thus, partnerships with them are a competitive advantage for Trax and an entry barrier for new players. Trax has enough liquidity for acquisitions and strategic access to unique information.

In April 2021, Trax had a huge funding round, securing investments from Softbank and Blackrock. Thus, the company found itself in the "too big to fail" category, as investment funds of this level take an active part in the development of their portfolio companies and help them achieve high valuations.


Company risks

Three types of Trax competitors can be identified on the market: retail consulting companies such as LatentView, retail processing tools such as IRI, and analytical platforms such as RW3 and Sisence, which issue recommendations to B2B companies. But Trax is the leader, thanks to the most developed FMCG product, as confirmed by its client base.

The company has opted for takeovers as one of its main growth strategies. Last acquisitions were in February and March 2020, also several are scheduled for 2021. If anything, this is quite a costly process, and adaptation of new companies takes a long time. for This affects the free cash flow of the company, making it unlikely that break even point will be reached soon.


Financials and Valuation

Over 10 investment rounds, the company has raised more than $1 billion from investors, including SoftBank, Blackrock and Sony Innovation fund, known for their investments in successful technology startups. After the investment round in April 2021, the company was valued at $2.4B. Trax stock trades $63 per share in the over-the-counter market, which would approximate a $2.5B valuation.

Trax revenue is growing steadily at a high rate due to the attraction of new clients and an increase in the number of clients with a high average check. The CAGR in 2015-2019 was 80%. In 2020 the revenue increased by 50% compared to 2019, despite the negative impact of the pandemic and amounted to 119M. We expect revenues of $200-250M in 2021 in the wake of acquisitions and recovery of the retail industry. Given the average P/S 25x for high-growth tech companies and Trax Retail’s large market size, the expected value of the company at IPO hovers around $5-7B. The expected return on investment is 150%.

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Publication
25 Sep
Minimum Amount
1 share
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Shares Outstanding
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Public Offering Date
Pending
Estimated Gains
+150%
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Exit
̴ 2021
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Fees

ENTRY FEE

3.5% of the share purchase amount. The fee is charged at confirmation of your investment bid.

EXIT FEE

0.5% of the share sell amount after the trade. The fee is charged at the investment exit.

SUCCESS FEE

20% of the profit gain. The fee is charged only if the trade is profitable at the time of exiting.

EARLY EXIT FEE

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Risks

United Traders is experienced in minimizing risks but a future investor should be aware of all risk types:

  • Illiquidity. There is a possibility that early exit from this investment will take more than 1 month.
  • Asymmetric information. Management and current investors have access to more internal information about the company than other market participants.
  • Time uncertainty. There is no information regarding next financing round or exit strategy timeframe (IPO or M&A).
  • Share dilution. The issue of additional shares by a company may reduce the value of shares of existing investors.

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