I’m not a professional and I’m not recommending anything. Just sharing my thoughts.
Winner of danish e-commerce award 2022 for companies with revenues below 100M DKK. Freetrailers business is lending trailers and now more recently e-bikes (with big baskets for goods transportation) in Denmark, Sweden, Norway and Germany through an app to unlock a bluetooth lock either for free or very cheap. Their model is to rent their service to a partner that have access to a big parking, Freetrailers put the other companies logo on the trailer (that way the other company can market themselves) and is also doing the maintenance of all the trailers. The contracts are usually around 3-4 years. They are also making money from the consumers using the trailers, but more of that later.
Alof of big companies are currently using Freetrailers services, IKEA is a long-term customer. Others worth mentioning is ICA (biggest grocery store in Sweden), COOP (2nd biggest grocery chain), Elgiganten (popular technology store), REMA 1000 (big grocery store in Norway+Denmark), Europris (biggest grocery store in Norway. Alot of other big hardware/bulding material stores such as Byggmax, Beijer, Woody, and XL Bygg are also connected. Having Freetrailer have become a way to attract customers. However, the users of the trailer DO NOT need to shop at the retailer where they are renting the trailer.
The utilization rate for the trailers is up to 89% (Denmark 90%, Sweden 97%, Norway 69% and Germany 20%). However, the utilization rate is calculated by number of bookings divided by days (you rent the trailer until the store opens the next day, most people do give it back much earlier though). What I can see myself in the app, they are less popular during the working days, but every trailer is used several times a day in the weekends, this is what is boosting the number.
The app:
The app have over 100 000 downloads on Google play with 10 000 reviews and an average score of 4.8 out of 5 stars. There is a big flow of positive comments, the few ones that are giving 1 star is due to technical issues (such as the trailer not opening for different reasons). Those commenters are being contacted by freetrailers support. The app made keeping track of unused trailers easier and have also made is possible for people to lend it when the store is closed.
**Consumers: ** The biggest share of the revenue comes from the consumers (70%), partners account for 20% and other is 10%. You don’t actually need to pay for using the trailer, but on the weekend, they are so popular that making the reservation fee of 29SEK and with (49SEK) or without (0SEK) insurance is worth it (without insurance you will have to pay somewhere between 150SEK (broken or lost adapter) to 4500 SEK (stolen trailer) based on damage/delayed return etc. Like I mentioned before, it’s possible to lend the trailer until before the store opens the next day. However, most people turn it in the same day the rent it. Adding on extra time cost 199 SEK per day.
Going forward, the current targeting market is approximately 70 000 trailers.
Competitors:
Competitors is old traditional gas stations where the price of lending varies between 150-350SEK for 0-3 hours. Other competitors are the local renters, but they match the prices of the gas stations. The biggest difference is the technologic solution, where the competitors are using a old outdated model. Another difference is that Freetrailers have the same price for all different kind of sizes, while it’s even more expensive somewhere else. In short, not only does Freetrailers have pricing power (being more than half the price the have potential to increase the prices, without hurting the consumers wallet), the app means a more effective operation, getting useful data on consumer usage and the luxury of lending when some stores are still closed ( 253 working days and 112 weekends)
They have a first mover advantage in northern Europe, there is also a company in Poland and USA being new potential markets to expand too. That is not communicated yet though, but during IPO there was a plan to enter Finland and Benelux. Programming software to hardware is not an easy task either, and I have not heard about any other company doing the same thing. During corona there have even been a problem meeting the demand due to component issue.
For many years have they lost money on their business, but since 2 years ago they have passed their breakeven point and since then they have been able to scale up in a much faster pace. Revenue growth have the last 3 years been betwwen 15-28% (19,8% CAGR), gross margins just above 40%. G&A to revenue have gone down significantly. Net margins at fiscal year 2019/2020 at 2%, and 8,5% at 2020/2021. Currently, the 3 quarters in 2021/2022, the net margin is sitting at 12%. Showing proof of the scalability strength. ROIC also on positive numbers, 15% last year and 5% year before that, free cash flow also on positive last 2 years.
Rented trailers per month, year 2018-2020
The trailers are not owned by freetrailers themselves, but are leased and then they put Freetrailers lock on them, meaning that they are not as capital intensive as they might seem, every trailer the past 2 years have accounted for roughly 20 000 DKK of revenue per year on average. Debt is not a problem either, debt to equity at 0,75. Cash & cash equivalents at 9,7M DKK and debts is low at around 5,5 DKK. EBITDA to debt at 1,36.
Freetrailers goal is to reach 1 600 000 rentals during 2025/2026, today they make an average of 80 DKK per rental, this would mean that they would reach 128M DKK in rental revenue.
Freetrailers is already highly valued compared to it’s financials today with a market cap of 320M DKK and P/E of 35. I value the business at 2025 to somewhere between 432-486M DKK, based on a total revenue of 150M DKK and net margins at 16-18% combined with a P/E of 18 (average in Denmark
1969-2003 and for Stockolm the last 100 years is 13, but take their reputation as a growth company into consideration). With a positive mindset that it can be better than that too.Stock price: 45-51 DKK
- Revenue growth
- Pricing power, increasing their prices for better margins and more growth
- New type of trailers
- Expansion to more countries.
I’m not a professional and I’m not recommending anything. Just sharing my thoughts.
Winner of danish e-commerce award 2022 for companies with revenues below 100M DKK. Freetrailers business is lending trailers and now more recently e-bikes (with big baskets for goods transportation) in Denmark, Sweden, Norway and Germany through an app to unlock a bluetooth lock either for free or very cheap. Their model is to rent their service to a partner that have access to a big parking, Freetrailers put the other companies logo on the trailer (that way the other company can market themselves) and is also doing the maintenance of all the trailers. The contracts are usually around 3-4 years. They are also making money from the consumers using the trailers, but more of that later.
Alof of big companies are currently using Freetrailers services, IKEA is a long-term customer. Others worth mentioning is ICA (biggest grocery store in Sweden), COOP (2nd biggest grocery chain), Elgiganten (popular technology store), REMA 1000 (big grocery store in Norway+Denmark), Europris (biggest grocery store in Norway. Alot of other big hardware/bulding material stores such as Byggmax, Beijer, Woody, and XL Bygg are also connected. Having Freetrailer have become a way to attract customers. However, the users of the trailer DO NOT need to shop at the retailer where they are renting the trailer.
The utilization rate for the trailers is up to 89% (Denmark 90%, Sweden 97%, Norway 69% and Germany 20%). However, the utilization rate is calculated by number of bookings divided by days (you rent the trailer until the store opens the next day, most people do give it back much earlier though). What I can see myself in the app, they are less popular during the working days, but every trailer is used several times a day in the weekends, this is what is boosting the number.
The app:
The app have over 100 000 downloads on Google play with 10 000 reviews and an average score of 4.8 out of 5 stars. There is a big flow of positive comments, the few ones that are giving 1 star is due to technical issues (such as the trailer not opening for different reasons). Those commenters are being contacted by freetrailers support. The app made keeping track of unused trailers easier and have also made is possible for people to lend it when the store is closed.
**Consumers: ** The biggest share of the revenue comes from the consumers (70%), partners account for 20% and other is 10%. You don’t actually need to pay for using the trailer, but on the weekend, they are so popular that making the reservation fee of 29SEK and with (49SEK) or without (0SEK) insurance is worth it (without insurance you will have to pay somewhere between 150SEK (broken or lost adapter) to 4500 SEK (stolen trailer) based on damage/delayed return etc. Like I mentioned before, it’s possible to lend the trailer until before the store opens the next day. However, most people turn it in the same day the rent it. Adding on extra time cost 199 SEK per day.
Going forward, the current targeting market is approximately 70 000 trailers.
Competitors:
Competitors is old traditional gas stations where the price of lending varies between 150-350SEK for 0-3 hours. Other competitors are the local renters, but they match the prices of the gas stations. The biggest difference is the technologic solution, where the competitors are using a old outdated model. Another difference is that Freetrailers have the same price for all different kind of sizes, while it’s even more expensive somewhere else. In short, not only does Freetrailers have pricing power (being more than half the price the have potential to increase the prices, without hurting the consumers wallet), the app means a more effective operation, getting useful data on consumer usage and the luxury of lending when some stores are still closed ( 253 working days and 112 weekends)
They have a first mover advantage in northern Europe, there is also a company in Poland and USA being new potential markets to expand too. That is not communicated yet though, but during IPO there was a plan to enter Finland and Benelux. Programming software to hardware is not an easy task either, and I have not heard about any other company doing the same thing. During corona there have even been a problem meeting the demand due to component issue.
For many years have they lost money on their business, but since 2 years ago they have passed their breakeven point and since then they have been able to scale up in a much faster pace. Revenue growth have the last 3 years been betwwen 15-28% (19,8% CAGR), gross margins just above 40%. G&A to revenue have gone down significantly. Net margins at fiscal year 2019/2020 at 2%, and 8,5% at 2020/2021. Currently, the 3 quarters in 2021/2022, the net margin is sitting at 12%. Showing proof of the scalability strength. ROIC also on positive numbers, 15% last year and 5% year before that, free cash flow also on positive last 2 years.
Rented trailers per month, year 2018-2020
The trailers are not owned by freetrailers themselves, but are leased and then they put Freetrailers lock on them, meaning that they are not as capital intensive as they might seem, every trailer the past 2 years have accounted for roughly 20 000 DKK of revenue per year on average. Debt is not a problem either, debt to equity at 0,75. Cash & cash equivalents at 9,7M DKK and debts is low at around 5,5 DKK. EBITDA to debt at 1,36.
Freetrailers goal is to reach 1 600 000 rentals during 2025/2026, today they make an average of 80 DKK per rental, this would mean that they would reach 128M DKK in rental revenue.
Freetrailers is already highly valued compared to it’s financials today with a market cap of 320M DKK and P/E of 35. I value the business at 2025 to somewhere between 432-486M DKK, based on a total revenue of 150M DKK and net margins at 16-18% combined with a P/E of 18 (average in Denmark
1969-2003 and for Stockolm the last 100 years is 13, but take their reputation as a growth company into consideration). With a positive mindset that it can be better than that too.Stock price: 45-51 DKK
- Revenue growth
- Pricing power, increasing their prices for better margins and more growth
- New type of trailers
- Expansion to more countries.
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