Groceries group Woolworths is not known for its tech investments but is behind a company at the heart of the AI revolution sweeping through corporate Australia.<\/p>\n
The food giant owns 80.4 per cent of Sydney-based tech company Quantium, which sells data analytics and AI consulting services to leading companies such as Commonwealth Bank of Australia, Flight Centre, Qantas Airways and Telstra.<\/p>\n
Quantium founder and chief executive Adam Driussi said he has fielded inquires from more than a 1000 local executives seeking guidance on how they can use AI to improve operating performance.<\/p>\n
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By continuing you agree to our Terms<\/a> and Privacy Policy<\/a>.<\/p>\n His company, which is based in the South Eveleigh technology precinct in Sydney, is believed to have posted a profit of $15 million on sales of $311.6m for the 12 months that ended on June 30, 2024, a result likely to have continued to grow last financial year.<\/p>\n The business\u2019s valuation remains a secret. But Woolworths could have control of one of Australian tech\u2019s biggest winners, with more success for Quantium likely to pile pressure on the publicly-listed group to disclose what it thinks the stake is worth.<\/p>\n \u201cIt could be worth 10 times revenues, so say $3b,\u201d said Richard Hemming, the founder of the Under the Radar stock report.<\/p>\n \u201cAnd that\u2019s partly why we prefer Woolworths over Coles as it has this data element, but I really doubt they (Woolworths) will spin it off over the next couple of years as it has other priorities.\u201d<\/p>\n Engine room<\/p>\n Woolworths\u2019 declined to comment on what Quantium\u2019s worth, but valued the tech group at nearly $900m when it paid $223 million to increase its ownership interest by 28 per cent to 75 per cent in 2021.<\/p>\n Since then, Quantium has grown to more than 1200 staff and is positioning itself in the engine room of the AI revolution for retailers looking to analyse customer data, or improve sales and profit margins.<\/p>\n \u201cIt\u2019s still pretty early in terms of how well it\u2019s been doing and they\u2019ve got a dominant access to data,\u201d Mr Hemming said at the UBS Australia Conference in Sydney on November 11. \u201cWe don\u2019t know what the JV agreements are and the deals are opaque. And there\u2019s also not much reference to them (Quantium) in Woolworths\u2019 accounts.<\/p>\n \u201cQuantium\u2019s an ongoing winner and Woolworths, they\u2019re not likely to sell it for two years at least, probably five or more. Frist, Woolworths are looking to spin-off Big W before they do anything else, after they do that the analysts will do do a break-up valuation and try to work out what Quantium is worth.\u201d<\/p>\n Valuation metrics<\/p>\n The valuations of businesses linked to the AI boom can be subject to a range of differing opinions and inputs, but it\u2019s typical for a profitable software or AI business to trade on a multiple of somewhere between five to 15 times sales.<\/p>\n Common sense also suggests the AI boom means Quantium\u2019s valuation should\u2019ve grown significantly since the $900m price tag placed on it in 2021.<\/p>\n However, a tech-based consultancy such as Quantium may fetch a lower valuation than a high-profit margin software business, even if its services are in red hot demand.<\/p>\n Woolworths is a major user of Quantium\u2019s analytics under its Woolworths IQ project that helps the supermarket harness vast amounts of data related to customers rewards and pricing.<\/p>\n Mr Hemming said Quantium\u2019s reliance on a handful of big clients versus a more diverse client base may count slightly against it in achieving the sky-high valuations commanded by the best software and AI businesses.<\/p>\n \u201cWe\u2019ve seen it\u2019s been hard for Nvidia to command that nosebleed valuation as people are a little worried it\u2019s a bit reliant on four or so big customers itself,\u201d he said.<\/p>\n Shares in Woolworths have fallen 11.1 per cent over the past five years compared with a 25.5 per cent return for Coles, which is outpacing its rival in growing same-store sales and attracting new customers.<\/p>\n Woolworths investment in AI may improve sentiment over the medium term.<\/p>\n","protected":false},"excerpt":{"rendered":"Groceries group Woolworths is not known for its tech investments but is behind a company at the heart…\n","protected":false},"author":2,"featured_media":306559,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[256,254,255,64,63,99,84,6213,105],"class_list":{"0":"post-306558","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-au","12":"tag-australia","13":"tag-business","14":"tag-politics","15":"tag-society","16":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/306558","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=306558"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/306558\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/306559"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=306558"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=306558"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=306558"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}