In Australia, most public and private companies wrapped up the financial year on June 30. Australia’s tax year runs from July 1 to June 30, so most businesses align their financial years to coincide with this to keep things straightforward.
The latter part of August will see a tsunami of results released by companies listed on the Australian Securities Exchange (ASX) before the end-of-month reporting deadline. The FM has selected three ASX stocks that South African investors should keep an eye on during the reporting season.
First up is an American stock based in San Mateo, California. This is a town which should ring a bell for NFL fans and country music fans alike, being the home town of NFL “Goat” Tom Brady and the late Kris Kristofferson.
It is also the global headquarters for Life360, the company behind the namesake app, which is a staple for the personal security of many South African families and their loved ones. The business is listed on the ASX under the ticker code 360 and has a market capitalisation of A$8.8bn. The US is by far Life360’s largest market, but South Africa appears at number eight in terms of revenue by country for Life360.
The fact that South Africa represents a Top 10 market for Life360, despite its global operations, demonstrates the service level penetration in the South African market. This is notable given that South Africa is not one of its Top 10 markets for users. Life360’s usage in South Africa, sadly, is also another reminder of the broader crime environment in which we live.
The business is now looking to monetise its large user base by allowing users to add additional items that can be tracked on its platform. The company plans to add pets to its menu of options later in 2025 and as we move into 2026. This could be a potential catalyst in 2026, depending on the uptake among users of adding “fur babies” to their paid plans.
Life360 believes it has potential to grow paying users within the markets in which it operates
The company has about 83-million users, of which 2.4-million are paying subscribers. Life360 believes it has significant potential to grow paying users within the multitude of markets in which it operates, given that the penetration rates of paid users are much lower outside the US (15%) in places such as Australia (11%), the UK (10%) and the EU (2%).
Achieving similar penetration rates to those of the US across its major international markets over the next five years would be a significant boon for Life360. Management is confident there is scope for this, given the increase in penetration rates observed from 2020 to 2025 across all markets.
The potential to convert free users into paying users remains a significant catalyst for growth, with any incremental revenue translating quickly into increased profit. Free users pay their way by allowing advertising to be served to them.
Life360 operates in nearly every country worldwide. The weakening US dollar will provide a decent currency translation benefit to earnings through 2025, with the US dollar index trading down 10% so far in 2025.
The second company worth highlighting is Pinnacle Investment Management Group, with the ASX ticker code PNI and a market capitalisation of A$5bn. Pinnacle invests in existing fund managers and seeds others looking to establish their own funds and asset management businesses.
However, so far at least, Pinnacle has preferred to keep its ownership stake under 50% to incentivise managers to run their own business with an owner’s mindset. Pinnacle refers to this model as “supported independence”. Additionally, it offers fund managers, particularly those in the start-up phase, a comprehensive suite of back-office administration and distribution capabilities.
Pinnacle seeks to diversify its fund manager exposure across the asset class spectrum, with investments to date in fund managers running strategies across various equity strategies, private equity, infrastructure, fixed income and credit, among others.
The spread across multiple asset classes provides a significant level of diversification and earnings stability through the various cycles each asset class experiences over time. The fund managers it invests in also provide Pinnacle with underlying end-client diversification, with look-through funds under management coming from retail, institutional, and international clients. While the business has grown into a well-established player within the Australian asset management market, it has now begun to expand its reach and introduce its model to international markets.
The company has established operations in London and New York over the past three years. It has made its first few acquisitions in these markets as it seeks to emulate its Australian successes internationally.
Pinnacle generates revenues from its share of net management and performance fees, as well as traditional administration and distribution fees from the ancillary and support services it provides to fund managers. Commentary on the international strategy over the medium term will be a key part of the upcoming result, as further growth in the Australian business appears to be limited, given the current scale.
The other thing to look out for will be the level of performance fees coming through from the underlying managers, given that the bulk of its Australian fund manager base will have crystallised performance fees as of June 30 for the end of the financial year or the quarter. This could provide a nice fillip to earnings and the figure may well come in ahead of analysts’ expectations.
The third ASX-listed company to consider is SiteMinder, with the ASX ticker code SDR and a market capitalisation of just over A$1bn. This is an enterprise software company operating in the hotel industry.
SiteMinder helps hoteliers expand and optimise their distribution around the world to maximise their revenue and overall profitability. Essentially, it sits between the hotel owner and online booking sites such as Booking.com and Expedia, as well as other distribution channels, including tour operators and direct bookings on its site and network sites, intelligently funnelling hotels’ inventory to achieve the optimal level of price and volume, all in real time.
Every hotel must strike a balance between occupancy and average room rates if hotel operators are to achieve maximum profitability. SiteMinder’s software plays a key part in delivering this for hotel operators.
The business services more than 40,000 properties globally and facilitated $80bn in bookings for its hotel clients last year. SiteMinder has recently expanded its service offering to include transaction-related income, such as payments and product upsells. However, 80% of its revenue still comes from core SaaS (software as a service) revenues, sheltering it from the vagaries of discretionary leisure spending by consumers.
It has also begun to refine its data analytics offering by providing high-level, localised data on aspects such as demand and price profiles in a particular area where the hotel operates. For example, what is the current nightly rate for the local area? What is the average occupancy? What is the pace of bookings?
It also provides strategic insights into specific major events, such as the Springboks playing in Cape Town or Taylor Swift performing three nights in Manchester, allowing hotels to price and plan accordingly. All of this helps hotel owners to maximise their profitability.
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