SeeThruEquity Issues Update on Generation NEXT Franchise Brands, Inc. (VEND) and Raises Target Price to $3.50
ACCESSWIRE•July 19, 2018
NEW YORK, NY / ACCESSWIRE / July 19, 2018 / SeeThruEquity, a leading independent equity research and corporate access firm focused on smallcap and microcap public companies, today announced it has issued an update on Generation NEXT Franchise Brands, Inc. (VEND) and has raised its target price to $3.50.
We are updating coverage of Generation NEXT Franchise Brands, Inc. (VEND). Located in San Diego, CA, VEND was founded in 2016 and is the parent company to 1) Fresh Healthy Vending LLC, a leading healthy-choice vending machine franchise and 2) Reis and Irvy's, Inc., a robotic frozen yogurt vending kiosk. We see several catalysts ahead for VEND as it prepares for a nationwide rollout of its Frozen Yogurt Robots, in partnership with manufacturing leader Flex, Inc., which was responsible for manufacturing the first Redbox units. The company has also partnered with Dannon YoCream, Stoelting Food Service, and Pitney Bowes, which will provide national installation and servicing.
VEND reports $50mn in bookings in FY18
On July 9, 2018, VEND Chairman and Founder Nick Yates announced the company completed FY2018 (June 30, 2018) with aggregate franchise sales bookings and deferred revenue of $50mn for its flagship Reis & Irvy's Frozen Yogurt Robots, representing approximately 1,200 units over 250 franchises. The company also stated that its cash position had improved to $10mn, and total assets had reached $45mn, versus $18mn at the end of FY2017. Reaching a key milestone for revenue recognition, VEND has begun customer installations of the Frozen Yogurt Robot in June 2018, with initial installations taking place in Pennsylvania, Texas and Michigan, including at Great Lakes Crossing Outlets, Michigan's largest indoor mall. Management now expects to deliver 50 units in July 2018, with the pace reaching 150 in August and 240 units per month by September.
Bookings momentum appears to be continuing into FY2019
In addition to the strong $50mn of new franchise sales bookings in FY2018, VEND appears to be on pace to more than double this figure in FY2019. The company announced that it had received additional bookings commitments for up to $110mnm. We believe this represents commitments of more than 2,800 new machines, which, if these commitments close, would bring the total network to approach an installed base of 4,000 machines over the next 12-24 months. Recent new business wins include the June 20, 2018, announcement that five-time Major Golf Champion Phil Mickelson and career-long business manager and business partner Steve Loy had committed to becoming franchisees with 30 Frozen Yogurt Robots planned for the San Diego area.
On June 29, 2018, the company also announced a significant new master franchise agreement in the Atlanta area with local business leader and founder of Clinical Resources LLC Jennifer Scully. The deal includes exclusive rights to the Atlanta metro area, including commitments for up to 500 machines, and represents a revenue opportunity of more than $20mn, according to the announcement. In addition to revenue from new franchise sales, the Frozen Yogurt Robot business also includes franchise agreements that call for ongoing revenue sharing on gross sales, providing an annuity like future revenue stream on its installed base.
Raising target to $3.50
We are updating our price target to reflect recent momentum in the business, as highlighted by management in recent new bookings announcements, which position the company for robust growth in FY2019. We note that VEND appears to be gaining traction quickly in the frozen yogurt market with its strategy of emerging as a form of Redbox for frozen yogurt. The company has been a strong performer in our coverage universe, with shares rising by 160.2% in the last 12 months.
