Maxim: Society Pass (Nasdaq: SOPA) - 1Q22 Results And Outlook; Positive On Opportunities In The SE Asia E-commerce Market

• 1Q22 results reported on May 17, 2022 with the company is in the early stages of launching online services and adding new acquisitions.
• Leflair, an online seller of luxury goods, was relaunched in September 2021 in Vietnam and was the main revenue contributor. Two acquisitions in grocery and delivery were announced in February 2022 as management looks to expand organic growth with M&A.
• A loyalty rewards program will be launching this summer and has the potential to create upside with high margin business.
• The company ended March 2022 with $31M in cash (worth over two-thirds of the company's market cap) and no debt, which Maxim believes supports organic growth for the next 2 years.
• Tailwinds include attractive SE Asia markets and capital to spur growth.

1Q22 results highlight early stages of building a Southeast Asian ecommerce company. Society Pass is in the early stages of building an online luxury store (Leflair), acquisitions of online delivery companies Handycart and Pushkart (during 1Q22), and hardware and software solutions to merchants (#HOTTAB) in SE Asia. Maxim has a positive view on this market given faster-than-expected growth rates, increasing mobile and ecommerce penetration, younger populations, and the opportunity to consolidate smaller companies.

1Q22 revenue of $445K increased significantly from $10K in the prior year quarter. Almost all of the quarter's revenue came from the online ordering segment.

Healthy cash. The company ended March 2022 with $31M in cash and no debt. Cash included the net $25M raise from the company's November 2021 IPO and $10.7M net from a February 2022 capital raise. Maxim projects current cash levels should be sufficient to fund organic growth over the next two years.

Acquisitions. A key component of the company's strategy revolves around strategic acquisitions in key verticals. The company recently announced the acquisition of two companies in February, which Maxim believes should start contributing to revenue in 2Q22.

• Pushkart – acquired 2/14/22, is a fast growing grocery delivery service in the Philippines with 125K registered users. SOPA plans to expand the service into 19 cities and increase the registered user base to 300K total by the end of 2022.
• Handycart – acquired 2/25/22, is an online food delivery business based in Hanoi, Vietnam. The company currently has about 40 restaurants, mainly centered around Korean cuisine, registered on its platform. In 2022, SOPA plans to expand the offering into Ho Chi Minh City and bring the number of restaurants on the platform to 500, with the addition of Japanese and Chinese cuisines.

Significant revenue growth for the next two years. Maxim expects growth from spending on marketing, expansions, and launch of Loyalty Points in mid-2022. Maxim also factors in acquisitions such as Pushkart.ph and Handycart, primarily starting by the end of 2Q22. According to the CEO of Leflair Group (May 11, 2022 article), the new strategy is to provide all services from online to offline sales for fashion brands for the SE Asian market; so the plan is to acquire partners in the field of advertising, distribution, and retail. Maxim projects revenue to increase from $0.5M in 2021, to $12.9M in 2022. For 2023, Maxim maintains revenue projection of $38.2M. Maxim anticipates management will be aggressive in M&A, which Maxim expects to provide upside to estimates.