Digital Transformation Will Expand Peer-To-Peer RV Adventure Travel

Key Takeaways

• Strategic insurance products, automation, and platform upgrades are set to drive rapid margin expansion, exponential user growth, and category leadership in the peer-to-peer RV rental market.
  
• Powerful network effects and rising interest in flexible, sustainable travel position Camplify to achieve durable revenue growth, high user retention, and global market dominance.
  
• Reliance on volatile programs, shrinking market size, cost pressures, and rising competition threaten Camplify's revenue stability, margins, and long-term growth potential.

Catalysts

Operates peer-to-peer digital marketplace platforms to connect recreational vehicle (RV) owners to hirers in Australia, New Zealand, Spain, United Kingdom, Germany, Austria and the Netherlands.

• Analysts broadly agree the MyWay captive-backed insurance mutual will double gross profit margins for membership revenue, but this product could also unlock entirely new retail and partner channels, driving step-change improvements in revenue growth and margin expansion as Camplify leverages its insurance competency across new international markets.
  
• The consensus sees recent technology and automation investments as margin accretive, but these operational advances could also make Camplify the category leader in peer-to-peer RV rentals by enabling viral user growth at far lower customer acquisition costs and dramatically increasing conversion rates, resulting in industry-leading EBITDA margins and rapid scale.
  
• Camplify's unique peer-to-peer platform is perfectly positioned to capture outsized share of the burgeoning experience-driven travel market, as shifting consumer preferences toward flexible, local, and sustainable holidays dramatically expand the platform's total addressable market and push long-term booking volume and transaction values to record highs.
  
• The platform's rapidly growing network effect, exemplified by a double-digit increase in premium members and steady RV fleet expansion, creates a powerful moat that will drive higher utilization rates, improved take rates, and compound revenue growth as the user base becomes increasingly sticky.
  
• As the digitization of travel accelerates, Camplify's first-mover advantage, recent platform upgrades, and aggressive international expansion position it to become the default platform for RV sharing globally-enabling compounding returns through higher recurring revenues, superior margins, and multi-geography earnings growth.

Camplify Holdings Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Camplify Holdings compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Camplify Holdings's revenue will grow by 16.6% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -37.5% today to 13.2% in 3 years time.
• The bullish analysts expect earnings to reach A$8.8 million (and earnings per share of A$nan) by about September 2028, up from A$-15.8 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 10.5x on those 2028 earnings, up from -1.9x today. This future PE is lower than the current PE for the AU Transportation industry at 16.1x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.47%, as per the Simply Wall St company report.

Camplify Holdings Future Earnings Per Share Growth

Risks

• Camplify's revenue and gross transaction value declined year on year, driven by the wind-down of significant programs like the New South Wales Temporary Accommodation Program and exit from van sales, highlighting the risk of over-reliance on government programs and cyclical demand, which could lead to ongoing revenue volatility.
  
• Secular trends such as increased urbanisation and a consumer shift toward car-free lifestyles may reduce the pool of potential RV owners and renters, shrinking Camplify's long-term addressable market and limiting top-line growth over time.
  
• Persistent cost-of-living pressures and high inflation could continue to depress discretionary spending on recreational travel, risking a further decline in platform bookings and utilization rates, thereby hindering revenue recovery or growth.
  
• Rising technology, regulatory compliance, insurance costs, and increased provisioning for potential bad debts are placing ongoing pressure on Camplify's operating margins and net earnings, despite recent operational cost-cutting.
  
• Increased competition from both established travel platforms and new market entrants, combined with the threat of regulatory changes targeting peer-to-peer sharing economies, could erode Camplify's market share and pricing power, suppressing long-term revenue growth and profitability.

Valuation

• The assumed bullish price target for Camplify Holdings is A$1.05, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Camplify Holdings's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$1.05, and the most bearish reporting a price target of just A$0.67.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be A$66.9 million, earnings will come to A$8.8 million, and it would be trading on a PE ratio of 10.5x, assuming you use a discount rate of 7.5%.
• Given the current share price of A$0.41, the bullish analyst price target of A$1.05 is 61.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.