Oct 25, 2014- #XURPAS (Surpass) All Smartphone Growth Expectations?

(Special Thanks to Mr. J.A. who asked me to study this company along with the prospectus, powerpoints et al.)

All References can be found through the prospectus of Xurpas IPO and just a few clicks using your mouse to find as much info all throughout net. 

Risk Rating: Highly Speculative —– Almost Categorized to “Micro-Cap, Small Cap” Category


Xurpas Inc.
Offering: 344,000,000 Common Shares

Offer Price:  Up to P4.19 per Offer Share

Offer period:October 27 to 31

Listing is eyed by November 5.

Total IPO float : Php1.44 Bil

Sole Issuer and Underwriter: SB Capital Investments

Profile: Technology Company (local developer of digital products and services for mobile phones)

Outstanding Common Shares 1,720,000,660

References: http://www.gmanetwork.com/news/story/384537/economy/companies/xurpas-sees-ipo-on-pse-paving-way-to-grow-in-southeast-asia


First things first, who is Nico Jose “Nix” Nolledo?  I sent a friend request that hasn’t been accepted yet, but oh well, maybe one day I can “call” him up to know about the ins and outs of his business once listed. He seems like an interesting guy, someone I’ll have a intellectual crush on (mild lang) for business inspirations.  His profile shows he’s a Sandman fan judging from that Neil Gaiman picture.  Well I definitely like a guy who likes Neil Gaiman (oh but that doesn’t mean it’s a good investment just coz of that. wahhaha. I’m digressing.  Let’s go forward with IPO details)

nix nolledo facebook page

Here’s what ( Wikipedia article ) says about him:

He’s 38 years old (just 10 years my senior and THAT successful.  WOAH!)

Nico Jose “Nix” Nolledo (born September 12, 1976) is a Filipino entrepreneur who is presently CEO of Xurpas Inc, one of the largest value added service providers in the Philippines. He is also the co-founder, majority shareholder and Chairman of Starfish Mobile International; CEO of Xurpas International; co-founder, major shareholder and Chairman of the Board of PinoyExchange and Havoc Digital; and co-owner of Fluxion Inc. He is also a founding member and director and president (for 2010) of the Internet and Mobile Marketing Association of the Philippines (IMMAP) and a member of the board of directors of the Philippine Chapter of the Entrepreneur’s Organization (EO). He graduated with a business degree from Ateneo de Manila University. He was selected as one of the top 50 entrepreneurs in the Philippines by Entrepreneur Magazine’s Philippine publication and was a featured speaker in the Asia Pacific Media Forum held in Bali, Indonesia in 2006. He is the son of the late Jose Nolledo, a member of the 1986 Constitutional Commission of the Philippines and a prominent law professor and constitutional expert and Mercedita S. Nolledo, a corporate executive in the Ayala Group of Companies.

Rappler calls him  “The Tech Runner”

There are 3 defining experiences in a person’s life. Marriage, having a child, and running a race. – Nix Nolledo

The guy is a venture capitalist who loves running marathons and created along with his business partner Raymund Caraza (run.ph) .  He is affiliated with the likes of tech entrepreneurs like Mr. Paul Rivera of Kalibrr (another exemplary technopreneur of the Philippines today. http://www.rappler.com/technology/features/60717-paul-rivera-kalibrr)

nix nolledo runs

Nix Nolledo is a serial angel investor, with many venture capital investments on the Philippine tech startup scene. He invests $100,000 per startup deal.  His portfolio of tech investments contains the following: Kalibrr, Ardent Capital, Digital Storm, Adeals.ph, Picco Candy,Havoc Digital, North Star, Happy.ph, North Star Help Solutions,Storm Rewards, Purple Click Philippines, MyRegalo.com,PinoyExchange.com, Fluxion, Xurpas, Ava.ph, Earn Mailier,Rappler

Reference: https://angel.co/nix-nolledo

His own company website says these things about him and his directors:

http://www.xurpas.com/copr-gov.html (Copy paste ko na lang below lahat tapos may commentary ako)

1.) Nico Jose S. Nolledo, President and Chairman of the Board

Mr. Nico Jose S. Nolledo is the President and Chairman of the Board of the Company.
He is also the Chairman of Fluxion, a subsidiary of the Company. A recognized pioneer in the Philippine ICT industry, Mr. Nolledo first started in the consumer technology sector when he founded PinoyExchange.com in 1999. Since then, he has founded, funded and sat on the board of directors of a number of technology companies such as Rappler.com, Gurango Software and MyRegalo.com. Mr. Nolledo is also the founding director and former president of the IMMAP, the founding director of DCOM and presently sits as a member of the Entrepreneurs’ Organization (EO), Philippine chapter. Mr. Nolledo holds a Bachelor of Science degree in Management from Ateneo de Manila University, Loyola Heights, Quezon City.

Who are the board of directors? (They’re all worth reading, academics and hey #DNL’s Alvin Lao is part of the crew?  A surface check shows you they’re all “academics, ivy-league silicon hotshots of the Philippines”)
2.) Raymond Gerard S. Racaza, Director Treasurer and Vice President for Operations

Mr. Raymond Gerard S. Racaza is a co-founder, Vice President for Operations and Treasurer of the Company. He is responsible for the overall business operations of the Company, such as carrier-relationship management, marketing, product design, and profit and loss responsibility for the core Company services. Under his leadership, the Company grew from a start-up company to become one of the top technology companies in the country. Mr. Racaza spearheaded the launch of multiple Xurpas projects including Gentxt, Jollibee Bee Hottah, Petron Tank Up and Text, and the Company’s big campaigns. Before founding Xurpas, Mr. Racaza was the Senior Solutions Consultant of Wireless Internet Solutions, Inc. He was also part of the original development team of iAyala that built the first Wireless Application Protocol (WAP) site in the Philippines. Mr. Racaza holds a Bachelor of Science degree in Computer Science, Major in Information Technology from De La Salle University.

(To many great programmers in the Philippines today – wink wink @Investagrams, @Stocksph, @Bookaka – look at your future possible venture capitalists – Startup Scene in Pinas is happening :D) 

3.) Fernando Jude F. Garcia, Director, Vice President for Technology and Corporate Secretary

Mr. Fernando Jude F. Garcia is a co-founder, Vice President for Technology and Corporate Secretary of the Company. He created the Griffin Platform of the Company which is the mobile consumer content gateway and platform for all of the Company’s mobile consumer content products and services. He also created the Company’s modular middleware system that can easily integrate with any modern billing gateway. He is the chief engineer responsible for the Company’s software architecture and systems integration. Examples of such systems and protocols are the following: for SMS (CIMD2/EMI-UCP/SMPP), for MMS (EIAF/MM7), for Voice Services (SIP), for Billing/IN (Diameter/UCIP/ParlayX2.1) and Security (IPSEC). Mr. Garcia directly manages and supervises the technology team of the Company. Before joining the Company, Mr. Garcia was part of iAyala as a software developer, during which time he learned Java, web development, data base programming and Unix/Linux administration. Mr. Garcia holds a Bachelor of Science degree in Applied Physics from the University of the Philippines, Diliman, Quezon City.

(Heavily Skewed on the Technical Sciences and “Googley- kind of board of directors” we have here) 

4.) Wilfredo O. Racaza, Director

Mr. Wilfredo O. Racaza is a director of the Company He has 45 years of Marketing and Finance experience under his belt. He was the head of New Business Development in Mobil Oil Philippines for 15 years. Mr Racaza is currently an insurance executive in Manulife Financial Philippines for the last 29 years upto present. He he has garnered numerous accolades and awards. Among the highlights are multiple Branch of the Year awards, and consistent agency sales awards. He has been a consistent awardee in the General Agents and Managers Association (GAMA) of the Philippines from 2003 to 2014. Mr. Racaza holds a Bachelor of Science in Commerce Degree Major in Accountancy from Xavier University in Cagayan de Oro City.

5.) Mercedita S. Nolledo, Director

Ms. Mercedita S. Nolledo is currently the Corporate Secretary of Ayala Land, Inc., Ayala Corp. and Ayala Foundation, Inc. Ms. Nolledo also serves as the Treasurer and Corporate Secretary of Alabang Commercial Corporation, Enjay Hotels, Inc., Enjay, Inc., Ayala Hotels, Inc. (AHI), and Laguna Technopark, Inc. She also sits as the Treasurer of Ayala Infrastructure Ventures Inc., Makati Property Ventures Inc., Aurora Properties Inc., Vesta Property Holdings Inc., and Laguna Properties Holdings, Inc. (LPHI), Makati Development Corporation, JMY Realty Development Corporation, Philippine Tuberculosis Society, Inc., Ayala Realty Development Corp., and Roxas Land Corporation. She is also the Treasurer and Vice President of Sonoma Properties, Inc. Ms. Nolledo is also currently the General Counsel of the Ayala Group of Companies and the Senior Managing Director of the Ayala Corp. She is the Chairman of Ayala Property Management Corporation, Cebu Insular Hotel Co., Inc., BPI Investment Management, Inc., FEB Management, Inc., and PEx, Inc. Ms. Nolledo also sits in the Board of Directors of several big companies, such as the Bank of the Philippine Islands since 1991, and Ayala Land, Inc. since May 1994. She also serves as Director of FEB Management, Inc., PEx, Inc., BPI Capital Corporation, BPI Family Savings Bank Inc., Alabang Commercial Corporation, Enjay Hotels Inc., Enjay, Inc., Ayala Hotels, Inc., Laguna Technopark, Inc., Ayala Aon Risk Services, Inc., Honda Cars Cebu, Inc., Honda Cars Makati, Inc., Isuzu Automotive Dealership, Inc., Isuzu Cebu, Inc., Ayala Automotive Holdings, Inc., Ayalafil, Inc., HCMI Insurance Agency, Inc., Mandaue Primeland, Inc., Ayala Infrastructure Ventures Inc., Makati Property Ventures Inc., Aurora Properties Inc., Vesta Property Holdings Inc., and Laguna Properties Holdings, Inc. (LPHI). She is also a Member of the Board of Trustees of Ayala Foundation, Inc. (AFI) and BPI Foundation, Inc. Ms. Nolledo has served as a Director of Cebu Holdings Inc., from 1993 to April 28, 2006 and of Ayala Corp., from 2004 to 2010. Ms. Nolledo also served as an Executive Vice President at Ayala Land, Inc., until April 5, 2006 and as the firm’s Treasurer until June 30, 2004. Ms. Nolledo topped the Certified Public Accountant exams in 1960 and also topped the bar exams in 1965. She holds a Bachelor of Science in Business Administration in Accounting from the University of Philippines in 1960. Ms. Nolledo holds a Bachelor of Laws (L.L.B.) from the University of the Philippines in 1965.

6.)Jonathan Gerard A. Gurango, Independent Director

Mr. Jonathan Gerard A. Gurango currently sits as an independent director of the Company. He has a solid track record in forming and running successful software companies. He founded Match Data Systems (MDS) in Seattle, USA in 1987, MDS Philippines in 1991, and MDS Australia in 1996. In 1999, he sold MDS to Great Plains Software, which was acquired by Microsoft in 2001. Mr. Gurango served as the Asia Pacific Regional Director for Microsoft Business Solutions, before he left in 2003 to form Gurango Software. In 2007, he was inducted into the Hall of Fame for Microsoft’s Most Valuable Professionals, in recognition of his mastery of software technology and business. In 2006, the Philippine Center for Entrepreneurship acknowledged him as one of the country’s Ten Most Inspiring Technopreneurs. In addition to leading Gurango Software as the most successful Microsoft Dynamics partner in the Philippines, he has co-founded several other software start-ups such as SPRING.ph, and is currently the President of the Philippine Software Industry Association. Mr. Gurango holds a Bachelor of Science degree in Industrial Engineering from the University of the Philippines, Diliman, Quezon City. He also obtained his Bachelor of Science degree in Electrical Engineering from the University of Washington.

7.) Alvin D. Lao, Independent Director

Alvin D. Lao is the Executive Vice President and the Chief Financial Officer of D&L Industries, Inc. He is also the Chief Financial Officer and Treasurer of Chemrez Technologies Inc. He serves as Director of Axis REIT, a real estate investment trust listed in Malaysia and as a Vice President of the Technology Club of the Philippines (Philippine alumni of the Massachusetts Institute of Technology), and is a past president and current member of the Entrepreneurs Organization (EO, Philippine Chapter), the Financial Executives Institute of the Philippines (FINEX) and the Wallace Business Forum. He is a director of Enderun Colleges, Gurango Software Corporation, First in Colours, Incorporated, D&L Polymer and Colours, Incorporated, FIC Tankers Corporation, Ecozone Properties, Inc., Anonas LRT Property and Dev’t Corp., and Hotel Acropolis, Inc. He was previously a faculty member of the De La Salle University Graduate School of Business. He graduated from the University of Western Australia with a Bachelor of Science degree in Information Technology (Honors) and Statistics. He also holds a Masters degree in Business Administration from the MIT Sloan School of Management.

(Grabe nagturo pala dati Mr. Alvin Lao sa DLSU Grad school?  Swerte nung mga students nya ah.)

8.) Jose Vicente T. Colayco, Business Development Director

Mr. Jose Vicente T. Colayco is the Business Development Director of the Company. Before he joined the Company, he was the co-founder and co-managing director of Digital Storm, a developer of on-line casual game platforms. Mr. Colayco was also the President of 888 Creative Studios, a subsidiary of Information Gateway, Inc. from 2004 to 2010, during which time he led the management of relationships with foreign and local licensors from the music, motion picture and game industries. Mr. Colayco also served as Managing Director for EMI Music Philippines and Marketing Director for Sony Music Philippines. Mr. Colayco holds a Bachelor of Arts degree in Philosophy and Religious Studies from Brown University, Magna Cum Laude. He obtained his Masters in Business Administration from Harvard Business School in Boston, Massachusetts.

9.) Alfonso A. Tagaysay, Chief Marketing Officer

Mr. Alfonso A. Tagaysay is the Chief Marketing Officer of the Company. He has 14 years experience in the mobile consumer content industry, managing mobile companies operating in various South East Asian markets: Philippines, Indonesia, Malaysia and Bangladesh. Before joining the Company, Mr. Tagaysay was the co-founder and co-managing director of Digital Storm, Inc. From 2004 to 2010, he was a Managing Director of Information Gateway. From 2000-2004, he was with Globe Telecom as Director. Prior to mobile, he worked in advertising with McCann Erickson from 1997 to 2000. Mr. Tagaysay holds a Bachelor of Arts, Management Economics degree from Ateneo de Manila University, Loyola Heights, Quezon City.


Overview of the Company:

I underlined the important key words.  Essentially, they create and develop digital content for mobile phones. They offer their mobile consumer content to our Telecoms (#TEL and #GLO)


digital content provider

Reminds me a little bit of my #700HK or #Tencent days when I was studying that company during 2008-2009 crises, the company’s largest growth comes from online casual games.

casual games

Chat Stickers and Promotions

stickers and promotions

They handle Enterprise solutions to the likes of Pepsi Philippines, Nestle Philippines to name a few

enterprise solutions

They develop marketing campaigns to the likes of  Yahoo, Jollibee, Nestle, Petron, Unilever, P&G for their SMS solutions.

consumer advertisements

more adverts



It’s still a small company.  Company earned P120M pesos last 2013 and is forecasted to grow to P209M pesos for 2014.


Considering they mostly have digital content, I was a little bit surprised that net margin isn’t even higher. I’d love to make a comparison of ABS-CBN’s Mobile Digital Content Solutions since that should pretty much be reflective as a comparison too.  Or tech companies abroad like Warner Brothers, Netflix (the ones that just make the original series like House of Cards) or the likes of HBO to see how digital content media moguls are being valued.

revenue and net margin

They’re growing mainly due to smartphone usage growth, that’s why consumer (blue line) is growing more than enterprise solutions.

smart phone growth

Forecasts Below Belong to SB Capital (Issuer and Underwriter)



Xurpas Inc. Highlights:

One of the largest independent mobile consumer content developers
in the Philippines
• 15% market share in the mobile consumer content development business
• 30% share in the mobile enterprise development business

Smart Phone Growth Expectations

smartphone growth penetration


Let’s talk about ALL THE RISKS!  They’re Plenty!  

1.) Short term contracts with Telcos
The Company derives a significant portion of its revenues from its share of the fees paid by mobile phone subscribers of its client Telcos to access, subscribe to or to use mobile consumer content and  services created or developed by the Company pursuant to its content provider agreements with such  Telcos. In general, under such content provider agreements, the Company provides mobile consumer  content and services, in the form of electronic games, messaging applications or info-on-demand services, to its client Telcos which, in turn, make such content and services available to their respective mobile phone subscribers for access, subscription or use, upon payment by such subscribers of access, subscription or usage fees set by the Telcos. These fees are paid to the Telcos by a mobile phone subscriber through virtual currency in the form of the subscriber’s outstanding  mobile airtime usage credits, and payment of the prescribed fees is made by a subscriber crediting with the corresponding amount of airtime credits a specific network access code (more commonly  known as a “short code”) identified by the Telco and assigned to the Company for such purpose.  In consideration for developing mobile consumer content and services and for making these available to the Telcos (and, indirectly, to their mobile subscribers), the Telcos grant the Company a share in the revenues derived from the fees paid by their mobile subscribers to access, subscribe to or use such mobile consumer content. The percentage of the Company’s share in such revenues, as well as other terms of these revenue-sharing arrangements with the Telcos, are governed by and provided for in the content provider agreements.


This IPO’s Use of Proceeds is mainly business expansion outside of the Philippines:

use of proceeds

Company gets net proceeds of 1.3 Bil pesos in return after this IPO.  That’s equivalent to 6X their 2013 Sales Revenues and enough cushion to pay all their liabilities and have enough cash to last them for 2016.  Whether they use the 1.3 Bil pesos to expand correctly outside of the Philippines, that I’m not so sure of but the IPO affords them a hell lot of time to make their business function work.  (Not sure if the expansion outside Philippines is money making – which makes me a bit skeptical on their Nov 2014- Nov 2016 plans)

net proceeds 1300


Revenue growth will register 100% growths mainly because it’s reliant on the surge of smart phone penetration.  Naturally Globe will be the driver of all the growth of Xurpas.  Xurpas is like the outsourced digital content arm of Globe (since most of the key board of directors all hail from iAyala or the previous software developing team of Ayala which went solo flights and made their startup company independent.)

revenue growth

This is my point why I find the net margins ghastly at 50%.  Their costs are essentially very small.  If their revenues expand like crazy, we’ll see net margins rising from 50% currently to as high as 70-80% since all their costs are just intellectual property, wages and services.  If you can forecast revenues to jump as high as 500M pesos with costs only fixed at around 100-150M pesos, you’ll be theoretically seeing 350-400M profits if they execute correctly.

Cost of services were mainly driven by expenses relating to (i) contractual services and (ii) salaries,
wages and employee benefits, relating to the rendering by the Company of mobile consumer products
and services and mobile enterprise services to its clients during the period.
Contractual services amounted to ₱39.71 million during the first six months of 2014 and are mainly
attributed to the services rendered by Digital Storm, Inc. (“Digital Storm”) an entity under common
control, in favor of the Company. These services include the promotion of mobile applications jointly
developed with the Company and assistance in the deployment of such applications in the Company’s
programs and events.

More Fans of Nix Nolledo in several blogs:

Here’s one post about him during 2011.   This guy has an underground startup scene following from the techno-industry.

“Our focus is always on how the companies we work with can benefit from mobile technology. I think this attitude has opened a lot of opportunities for us to get more projects. Doing a good job is the best marketing strategy as it ensures your partners will be doing more business with you. It’s the relationships you build that count the most.”


He’s mainly skilled in all things related to mobile and technology:

mainly technology guy

Business is mainly content provision so they generally get paid accounts receivables by their clients in 30 to 60 day terms.  They are essentially business partners of Globe Telecom and PLDT to put it bluntly.  (not that it’s a bad thing, but they are really earning money from these two client accounts.)  This is a tech company so what do you expect? Their only costs will be rentals, IT equipment, salaries to their workers.  This is all intellectual property investment.

cash rich and reliant on accounts receivables

Read more about the prospectus here:



Conclusions:  Companies like these are great for “inspirations.”  They dream about the future possibilities of how one day, we’ll be using our mobile phones to purchase things and they’ll help Globe and Smart do these things.  They’re at the forefront of new changes.  These are dynamic and highly intellectual people who are reinventing the game when there’s just clouds today.  What will they do with the P1.3 Bil ?  The use of proceeds is still murky to me.  Expand in Indonesia, Thailand sounds as cliche to me as any tech startup entrepreneur.  I’m pretty sure there’s more than meets the eye.  They are industry figures.  They have earned their right, but maybe they just haven’t quite made themselves explain what Xurpas really is.  Maybe it can surpass all growth expectations on smartphones, and maybe they’ll grow with Globe due to the revenue sharing agreements.  I personally use my mobile to update my Facebook profile and groups page almost every single day so I do agree about mobile advertising and the smartphone growth opportunities as tremendous.  Right now, I think this is highly speculative and not for the moms and pops.  This suits the yuppies, the idealists and those who probably know what these tech guys are doing.  I believe honestly they have their own “cult following” in the underground startup scene in the Philippines.  I would like to see the Philippine technology companies become main board companies.  Their board of directors are highly technical.  Most of them academes with lots of experience and innovators themselves.

We shall see.  Maybe I’m like such an old fart who can’t understand the new world out there.  Maybe I don’t understand the distinguishable moat.  It could have hit products like what Angry Birds of Rovio once upon a time did but I’m not sure if I want to invest in companies that have to establish themselves as THE leader in mobile content solutions and mobile digital content.  Aren’t there a slew of applications that can possibly do this?  Or am I just blind?  Seriously I need your help coz I frankly am not a TECH CRUNCH type of person so I can’t objectively even give a criticism.  This is too difficult for me to assess.

Risk Rating: Highly Speculative

– Faceless Trader


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One Response to Oct 25, 2014- #XURPAS (Surpass) All Smartphone Growth Expectations?

  1. NoobTraderStarter says:

    Nice write up and informative.. Please continue to post this kind of analysis..


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