Frontier Digital Ventures Q3 2024: Strategic Review Underway, with 360 LATAM Under the Spotlight

Frontier Digital Ventures, the tri-continental marketplace operator publicly listed on the Australian Stock Exchange (ASX) has released a trading update for the third quarter and also highlighted its need to unlock maximum value for its Latin American segment, 360 Latam.

Highlights include:

• Group revenues increased 5% year-on-year to A$83.4 million (USD 54.75 million) - last twelve months
• Group EBITDA increases 14% to A$7.2 million (USD 4.73 million) - last twelve months
• Group Quarterly revenues drop 3%
• Group Quarterly EBITDA is also down 37.5% after heavy investment in long-term product opportunities
• 360 LATAM grows revenues by 12% to A$55.4 million (USD 36.4 million)
• 360 LATAM EBITDA grows 59% to A$4.7 million (USD 3.1 million)
• Strategic Review underway for "undervalued" 360 LATAM segment

FDV's trading update and notification of its imminent strategic review submitted to the ASX yesterday highlighted the Group's need to unlock more value for 360 LATAM, which now contributes 66% of Group revenues compared to the 36% contribution when the company floated on the ASX in 2016.

Shaun di Gregorio, founder and CEO at FDV, said:

"When we listed FDV on the ASX in 2016, close to two trhids of our revenue came from Asia. Today, two thirds of our revenue is generated in Latin America, but we remain listed on the ASX.

"Having spoken with investors from around the world, it has become clear that to unlock the vlaue of 360 LATAM, we need to be engaging with groups that have proximity to and a deep understanding of the region. The primary focus of this strategic review, therefore, is to explore all options to maximize the vlaue of 360 LATAM for FDV shareholders."

360 LATAM consists of market-leading marketplaces in Latin America, including InfoCasas (Uruguay), Encuentra24 (Panama and Central America), Finacraiz (Colombia) and Yapo (Chile)—all of which FDW wholly owns, making 360 LATAM a regional leader for marketplaces.

FDV said:

The Board believes that FDV's current market valuation does not reflect the combined value of its three operating regions: 360 LATAM, MENA Marketplaces Group (MMG) and FDV Asia.

FDV today announces that the Board has initiated a Strategic Review aimed at maximising vlaue for all FDV shareholders. This review will be focused on unlocking the value of the 360 LATAM business, which may include a change of control, transaction or other liquidity event.

Given the stage of 360 LATAM, and in line with FDV's strategic vision of evalutating monestisation opportunities in shareholders' best interests, the Board believes it is an opportune time to explore strategic options for the business.

FDV is in the final stages of engaging financial and legal advisors to assit in undertaking the Strategic Review alongside manaement and the Board. There is no certainty that the Strategic Review will lead to any particular outcome or transaction and FDV shareholders do not need to take any action in relation to the review at this time.

Perhaps slightly ironically, 360 LATAM revenues fell in Q3 2024, with FDV citing lower transaction volumes for Uruguay's InfoCasas. Revenues for the segment reached A$13.3 million (USD 8.73 million). However, Colombian portal Fincaraiz grew revenues by 22%, while Encuentra24 (2%) recorded flat growth. However, Yapo's revenues fell 16% YoY but improved QoQ after a re-platforming exercise in the first half of the year.

In the MENA region, the MMG segment's revenues of A$2.4 million for the quarter were flat compared to the same period last year, while EBITDA was hit by investment into Avito and reduced demand for advertising and contribution from lower margin products. However, PropertyPro in Nigeria saw EBITDA up by 25% YoY despite flat revenues. FDV wholly owns all its assets in MENA.

Meanwhile, FDV Asia also suffered lower revenues and its EBITDA fell below zero after all its Asia businesses (AutoDeal, Hoppler, LankaPropertyWeb and iMyanmarhouse) recorded revenue shrinkage compared to the same period last year. FDV does not wholly own any of its Asia assets.

Finally, 360 LATAM's MLS-style solution 'Iris' doubled revenues YoY, from A$282,000 in Q3 2023 to A$588,000 in Q3 2024.