The REA Group Limited (ASX: REA) share price is up around 75x since 2004 which means $10,000 invested in the business back then would be worth $750,000 today plus a large amount of dividends for some extra pocket money.
And I don't want to be accused of hyperbole, but there's a fast-growing company on the ASX that has ambitions to be similar to the next REA Group.
In fact it's run by Shaun Di Gregorio who was the REA Group Limited general manager between 2010 to 2014 and iProperty Group CEO. Di Gregorio now seems to be getting a little traction with his Frontier Digital Ventures (ASX: FDV) business that is attempting to build online classifieds businesses in emerging markets worldwide.
Notably REA Group bought iProperty Group back in 2016, but has since had to write down a large part of the investment as it looks like it paid way too much for the asset.
It has investments in classifieds websites in countries as far flung as Paraguay, Myanmar, Uruguay, The Phillipines, Pakistan, Angola, Namibia and Morocco.
As can be inferred its targeting under-penetrated internet markets in order to build market-leading businesses ahead of any competition as anyone knows that in the online classifieds space building a network effect as a first mover is important.
Just look at the success of REA Group, Carsales.com Ltd (ASX: CAR) or SEEK Limited (ASX: SEK) as an example.
Turning to the numbers Frontier Digital Ventures posted an operating cash loss of $1.56 million on revenue of $3.6 million for the quarter ending December 31 2018.
Over the whole of calendar 2018 it made an operating cash loss of $6.5 million on $12.9 million in revenue.
It currently has $19.3 million in cash on hand and a forecast for a cash outflow of $5.7 million in the current quarter that will be offset by revenues taken in.
The company also reports that its "portfolio revenue" came in at $41.7 million for the year, although its share of the revenue was $14.4 million as it operates the classifieds site with local partners. This is no surprise when you're working in some of the world's more exotic business environments with complex natures.
Promisingly, it also reported that four companies it helps operate were profitable in the final quarter of 2018 and it would probably only take a few of these to become big winners over the long term to help lift FDV's value higher.
Its flagship asset is Pakistani property portal Zameen.com that posted revenue of $22.4 million in FY 2018 at an 81% growth rate. FDV has a 30% stake in this business and much of its valuation is around Zameen's success and potential.
According to its latest Appendix 3B FDV has 244.8 million shares on issue to give it a market value of $120 million at 49 cents per share today. Its portfolio of assets is growing quickly, but whether it gets close to repeating the success of iProperty or REA Group is yet to be seen.
