image description
15 July 2020 | Buy

Family Zone: Lets kids be kids

BUY (small cap, corporate deal) - Family Zone: Lets kids be kids

Family Zone (FZO:ASX) has been listed since early 2016. The company provides a school compliance system which ensures content filtering, device and management features to support school compliance, pastoral care and classroom control features to help manage student use of devices in and out of the classroom during school hours. This platform can then be used as a free “insights” service by parents to monitor their children’s use of devices whilst out of school/at home. Parents can decide to sign up for premium parental control accounts to enforce their own rules for device use after school if they choose. In the licence environment to schools the service is offered as a package with an annual licence fee charged at around $8 per student p.a. At the parental level the premium service offering is available to parents at a cost of $8 per month.

The business is growing strongly and has seen accelerating growth in the last few quarters. The business added 620 additional schools in the last quarter growing at 50% quarter on quarter (QOQ) to 1,860 schools. Student licences grew by 308,000 to 958,000 in the last quarter, up 47% QOQ. The majority of this growth in the latest quarter being delivered in the US market where the price offering mentioned above is in $US. Family Zone is now well established in Australia, NZ and the US markets, with an emerging exposure in the UK (18 schools). Despite a number of schools in place Family Zone has really only scratched the surface at this stage. In the US market alone there are 135,000 schools with 57 million students for instance.

The post COVID-19 environment has accelerated school and parent demand for tools to ensure a safer environment for their students/children where there are genuine requirements to have tools available to manage safe and directed activity on devices while the children are learning from home or may be required to learn from home. In the US, the Cares Act, which has been introduced post-COVID-19, is injecting US $13.5b into online education and waived restrictions on funds that can be used for technology. It is also legislated that there must be adequate filtering measures in place to provide these offerings. Family Zone has a validated product offering that is meeting an increasing need at present, and with no debt and around $12m in cash on the balance sheet, it looks well placed to grow at an accelerated rate. As such, we see strong speculative growth potential from this position.

Baker Young Corporate Advisory participated in the Family Zone placement.

For more information about how to participate in this and similar deals please click here.