Prezzee reported a revenue of more than $161 million, but despite these top line numbers, they copped a $79 million loss.
👉 Background: Prezzee was launched back in 2014 with the idea of selling digital gift cards. By 2020, Prezzee had launched into the UK and US and sold over one million e-gift cards.
👉 What happened: In the 18 months to December 2023, Prezzee sold worth $3.4 billion worth of e-gift cards, with revenue of more than $161 million. But despite these top line numbers, they copped a $79 million loss.
👉 What else: Prezzee claims their results are actually much better, and blamed Australian accounting standards for unflattering financial results - because the accounting standards don’t allow Prezzee to book “breakage” upfront.
💡Breakage is the dollar value of unused gift card balances - and this is where gift card companies make their real money.
💡According to Finder, 18% of Australians have lost out after a gift card that they held expired before they used. So, when gift card companies and retailers issue gift cards, they hope that some customers will never redeem it because that’s free money.
💡But under Australian accounting standards, the value of the card is treated as a liability until it is used. So even if a customer doesn’t use it for years, it’s not considered ‘revenue’ yet.
Sign up for Flux and join 100,000 members of the Flux family
