ShiftPixy Inc (PIXY)

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This is still a relevant article. Looking forward to earnings update.....

Stock Disrupting The Entire Gig Economy (NASDAQ-PIXY)
By stocktalktoday - October 29, 201820388
ShiftPixy, Inc (NASDAQ-PIXY)
ShiftPixy should release Earnings within 2 weeks, could push PIXY above $4.20
Put PIXY on your watchlist Immediately

Over the years most of us have looked at companies like Uber and Lyft and sighed. They’re multi-billion-dollar “unicorns” transforming the way we work, the way we drive, the whole economic landscape . . . but if you’re not a fancy venture capitalist, you never even got a chance.

We call it the gig economy now. It stretches to 35% of the workforce and generates $8 billion a year in household income for people willing to trade time for compensation. Together they create $700 billion a year in wealth.

And that’s an order of magnitude bigger than Uber. Which gave a couple of veterans of the staffing industry a firecracker of an idea that became ShiftPixy Inc. (PIXY).

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Uber isn’t a taxi company. They’re a technology company that built an app that matches labor capacity (drivers on demand) to customers (people who need a ride). The wheels are incidental . . . it could’ve been any industry they chose to disrupt.

And the staffing gurus had a thought: why stop at the car? If an app can convert leisure time into work time with the tap of a screen, why not finish the job and disrupt restaurants, stores, any other business that relies on paying warm bodies by the hour?

Their colleagues didn’t get it. It sounded like a lot of effort to make a lot of minimum wage work more efficient. You needed to be an expert to even see all the angles. But the guys who built PIXY were experts.

ShiftPixy, Inc (NASDAQ-PIXY)

Today PIXY is on an Uber-like path to exponential growth. They invested the hard work it took to build their app. They tapped a lifetime of connections to seed the customer base. This was back in 2015.

In the first fiscal year they booked zero revenue. Year two, $8 million. Year three, $20 million. Nice ramp, easily doubling every 12 months. Classic startup.

Last quarter PIXY booked $9.4 million revenue, effectively doing the work of the whole of 2016 in three short months. And with raw billings climbing at an exponential rate, that growth curve looks likely to continue into the foreseeable future. Wall Street is looking for $50 million in revenue next year, which is huge when you’re still dealing with an $87 million market cap startup.

They’ve come a long way in three short years. The secret is in that disruptive business model. PIXY approaches a restaurant or retailer and “buys out” the entire human resources side . . . everything from hiring to payroll. They pay all the people and handle all the paperwork.

Then that work force works for PIXY. They’re on call in case someone drops a shift or quits. If someone has free time and wants extra cash in a pay period, they can volunteer for on-demand shifts. Location by location, store by store, the labor pool expands. They’ve got close to 8,000 people on the books now, spread across the country: Texas, California, Chicago, Arizona.

And here’s the twist. Those people aren’t captive to one store any more. If a pizzeria gets busy, PIXY can call cooks and order takers in from other franchises. If you show up on the app as willing and able, everything flows smoothly.

The bosses love it. Their people are happy and scheduling stress drops to zero. PIXY’s app gives them the freedom to “select and swipe” entire shifts as easily as ordering an Uber ride.

The app is smart, powered by IBM’s legendary Watson. It forecasts pinch points, assigns incremental benefits coverage and automatically conserves overtime. Compliance is built in. Workman’s comp . . . Obamacare . . . the hired auto coverage food delivery drivers have to carry. It’s all there.

Turnover is sky high at this end of the economy now. People are constantly drifting from job to job or simply not bothering to show up. Every hire that jumps costs time, money and effort. Once PIXY is in the loop, all of that becomes PIXY’s problem.

Needless to say, it’s a thrill for small business, where close to 6 million managers need to juggle ever-shifting regulations just like a Fortune 500 company but don’t have the scale or the resources to hire a specialist.

As an example, look at just the 14 businesses and 337 employees PIXY took on last quarter. (Yes, that’s about one contract win a WEEK.) That’s 24 workers on average to manage and 14 separate and redundant HR cycles.

PIXY is a technology company. They’re about efficiency and automation. And with their scale, they’re already running payroll. They already buy insurance coverage. Suddenly the whole process of running those 14 companies gets streamlined.

Of course it’s a volume business. Last quarter the company’s partners handed over $60 million for labor and PIXY distributed $50 million back to the actual workers. It’s going to take a lot more scale to squeeze a profit out of those numbers.

But PIXY has time to wait, cash to burn and plenty of ambition. It’s a lean enough operation throwing off enough cash that the burn rate is relatively low . . . and they’ve got $8 million to fill the gaps that emerge in the meantime.

As for the ambition, this was buried in the latest quarterly filing:

Workers are now engaging with the application at the point of onboarding with ShiftPixy. We anticipate that employees will be able to use the app to secure additional shifts within our Ecosystem. When released to the general public, anticipated to be in the calendar year 2018, provided adequate funding is available to complete our development activities, the ShiftPixy mobile application will enable not only ShiftPixy shift employees but also ultimately shifters outside the ShiftPixy Ecosystem, many of them Millennials who connect to the outside world solely through mobile devices, to access available shift jobs at all of ShiftPixy’s participating clients. In addition to the benefits of working not as independent contractors but as employees, enjoying the protections of workers’ compensation coverage and employment laws, as well as the calculation and remittance of applicable employment taxes, among other benefits, shifters are also enabled to participate in ShiftPixy’s benefit plan offerings, including minimum essential health insurance coverage plans and a 401(k) plan.

What does that mean? If all goes as scheduled, PIXY is going to open up the app to anyone willing to show up at a store, restaurant or office . . . sometime in the next three months. If you remember the initial Uber boom where everyone with a driver’s license and a need for cash volunteered the wheels, that’s where this company is headed.

PIXY can go from the employer of record for a few hundred businesses to theoretically becoming the boss of EVERY bartender, waiter, order taker, busboy, janitor, receptionist, cook, checkout clerk, sales assistant, barista, delivery driver. Job after job, company after company, anyone who wants to work a shift only needs to turn on the app.

That sounds a lot like PIXY Nation to me. Go back to those payroll numbers in the “gig economy” we talked about earlier. Even if there’s only $8 billion in overall wages to capture here, that’s still a 3,200% growth opportunity.

Grab 3% of that huge job market, PIXY doubles its billings. And that’s not even counting the true disruptive force: people who migrate from conventional jobs to pick up an extra shift here and there. Uber converted 750,000 amateurs into professional drivers. Tap into the invisible world of moonlighters, students, housewives, retirees and the sky becomes the only limit.

A typical staffing company might grow to the point where they track 600,000 worker files. That’s a global giant. PIXY has built its system to be able to handle 10 MILLION. That’s four Walmarts. Not just four of the stores. Four retail networks, each the size of the giant.

But let’s start small and realistic, like the PIXY founders did. They’re still deeply invested in the company’s success, with 86% of the stock split two ways. They’re having a lot of fun changing the way America works in the 21st Century.

ShiftPixy, Inc (NASDAQ-PIXY)

Granted, they opted for a disruptive IPO path, which may be why you haven’t heard of them. They took a “crowd funding” approach to the market last year via the new Reg A channel . . . a little like how Google or Spotify went public, bypassing Wall Street bankers entirely.

It fits their future-forward business model, but it’s kept PIXY off the traditional analyst radar. That means no real estimates, no “consensus,” nothing but a few mavericks and management’s own guidance to steer expectations.

We don’t mind. This is more of a long-haul dream (backed by a real 3-digit revenue ramp) than a quarter-to-quarter horse race. As the gig economy rises and conventional jobs recede, PIXY is front and center.

Remember, management is here for the long game too with that 86% stake. And they’ve got huge plans . . . you can collect hints if you study the press releases. Their HR records are blockchain-native, which is an asset another staffing company would probably pay money to duplicate or license.

Home delivery keeps popping up around the edges . . . collect enough drivers and you’ve got a GrubHub killer or, depending on the way management pivots, Amazon’s best friend. Stores and restaurants are all desperate to compete on convenience but don’t have the institutional knowledge to keep the vans on the road.

Think back to how FTD took over the florist industry by consolidating the delivery side. Same thing. But it’s not just bouquets. It’s EVERYTHING. The app scales.

What’s that worth to Wall Street? Conventional staffing companies trade as high as 7-10 times revenue. Even on that scale, little PIXY is grossly underrated here at what looks like 0.3X 2018 revenue.

That doesn’t even factor in relative growth or dynamism . . . the founders here want to “disrupt” their old industry first and foremost, so there’s usually a premium for that kind of audacity.

But don’t take my word for it. Check the comps HERE and make up your own mind. People who know PIXY tend to be either true believers or on the short side. With a vision this grandiose and numbers ramping at this speed, it’s hard to stay on the sidelines either way.


https://stocktalktoday.com/cant-trade-uber-meet-the-3-stock-disrupting-the-entire-gig-economy-nasdaq-pixy-v3/