RIO DE JANEIRO, BRAZIL – In its first post-IPO results, Dotz is showing early signs that it is successfully executing its strategy to increase monetization of its 50 million customers, the company’s main promise during its roadshow.
The fintech, which began as a loyalty program, grew its marketplace’s (Gross Merchandise Value) GMV by 70% year-over-year in the second quarter, and “in August, growth continues to accelerate, reaching 98%,” CEO Roberto Chad told Brazil Journal.
TPV – spending by 184,000 co-branded card customers – grew 49%, reaching R$1.1 billion in the last 12 months. In the future, marketplace and financial services (which the company calls “techfin”) will account for 17% of revenue, up from 12% a year ago.
Dotz also saw a tenfold increase in downloads of its app to 1.5 million and an eightfold increase in digital account signups to 600,000. “Dotz’s big differentiator is our online and offline ecosystem, which generates customers and lots of data and enables that serial monetization,” the CEO said.
In practice, Dotz, like all digital wallets, seeks to increase the engagement of its customers and the revenue each of them generates for the platform.
According to Roberto Chad, most customers still only use the loyalty service (which generates an average revenue per user of 14R$ per year) and the credit cards that can collect Dotz points (which increases the revenue per user to about R$70/year).
If the customer also uses the marketplace and financial services part – today essentially co-branded cards and personal loans – this revenue per user reaches the sweet spot of R$335/year.
Dotz intends to start offering insurance on the platform this year and to start offering investments next year to expand monetization opportunities.
Chad says he has frequently met with Ant Financial, which bought 5% of Dotz shortly before the IPO and is helping build the credit-linked financial products and develop the Dotz Wallet, which launched a few months ago.
“One of Ant’s key requirements for us is that we have to create the ‘killer use case’…the thing that makes the customer want to use the wallet,” he said. “In our case, the killer use case was to give customers the ability to redeem their Dotz points for cash.
In the second quarter, 30% of point redemptions were already in this mode.
Now Chad wants to use the R$400 million he raised in the IPO to accelerate this strategy. According to him, one of the ways is to make small mergers and acquisitions of companies that complement the current business and can be integrated into the ecosystem.
Another option is to buy competitors. “We believe there will be consolidation in the wallet world, and we have the ambition to be a great consolidator,” he said.
Today’s results come at a time when Dotz stock is trading 20% below its IPO price. The company trades at an EV/sales multiple of 4x for the year, compared to 15x for Méliuz, its closest competitor at B3.
DOTZ PARTNERS WITH BR PREMMIA, WHICH HAS 17 MILLION CUSTOMERS
Dotz and Premmia, the customer loyalty program of the BR gas station chain, have joined forces in a commercial partnership. The goal of each? Repetition. The magic word of the digital universe. Those who earn points on Premmia can now use them on the Dotz marketplace and even exchange them for cash within the platform.
With the points they receive when filling up at BR gas stations, users will be able to redeem various products, top-up cell phones, buy airline tickets, pay bills and even convert dotz into cash. According to Chad, cash already accounts for 30% of all sales on the finance platform. “It is an important way to provide liquidity to loyalty programs.” At launch, there is a special offer: 10,000 Premmia points for 5,000 dotz.
Premmia has 17 million users, and Dotz has 48 million. According to Chad, while there will certainly be some overlap with the base, new customers will also be. But that’s not the only important point, in his estimation.
As with the Carrefour card (a more recent loyalty program), the partnership modality is significant because it is a cost-effective way to attract users. “Our acquisition cost is about R$2 to R$3 per customer, while some competitors pay ten times that,” he said.