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Speaker 1: This is what the Flux.

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Speaker 2: I'm Brett and I'm justin and it's Monday, the thirtieth

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Speaker 2: of March.

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Speaker 1: Doze boy. April first may be April Fool's Day, but

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Speaker 1: private health insurance are not joking with their price increases

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Speaker 1: on it this one. On April first, average premiums across

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Speaker 1: the industry will increase by four point four percent, and

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Speaker 1: this is the biggest annual hike in almost a decade.

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Speaker 2: Honestly, I'd justify it these days. But time as we

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Speaker 2: get to the end of the month, now is the

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Speaker 2: perfect time to see all the subscriptions that you've been

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Speaker 2: paying for this month. In the Flux Subscription Tracker, we

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Speaker 2: identify all your subscriptions in under thirty seconds and show

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Speaker 2: you the ones that you might not have been using

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Speaker 2: so you can cancel and save some more laughs. If

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Speaker 2: you want to save some money to kick off April,

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Speaker 2: make sure to download the Flux app and check out

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Speaker 2: the subscription tracker.

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Speaker 1: Three gigantic stories Today, Josy Boy Let's do it for

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Speaker 1: our first zero has announced a new partnership with Anthropic

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Speaker 1: to bring AI into accounting and prove that its business

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Speaker 1: won't be eaten by AI looks.

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Speaker 2: Like accounting might get a bit of a chat pop

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Speaker 2: personality upgrade, b man, So tell me more.

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Speaker 1: To Zero is the New Zealand founded accounting software company

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Speaker 1: with over four million subscribers globally.

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Speaker 2: Basically, it's the home of small business owners trying to

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Speaker 2: make sense of invoices and receipts.

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Speaker 1: But over the past year, Zero investors have been sweating

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Speaker 1: harder than a last minute tax return.

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Speaker 2: Because it's been growing fear that AI could replace accounting

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Speaker 2: software all together.

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Speaker 1: And since that fear crept in, Zero share price is

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Speaker 1: down around thirty five percent from its peak.

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Speaker 2: And they man, Zero's been talking a big game, working

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Speaker 2: on its own AI tool called Jacks. Well that's still

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Speaker 2: cooking in the background. It's made another AI move yeap.

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Speaker 1: Zero has announced a multi year partnership with Anthropic to

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Speaker 1: put its claud model directly inside Zero's platform.

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Speaker 2: So what does that actually mean?

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Speaker 1: Zero users will be able to ask Claude questions about

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Speaker 1: their financials like.

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Speaker 2: How's my profit margin tracking here on ear?

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Speaker 1: Or why have my entertainment expenses increased from last year?

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Speaker 2: And they man, it'll pull it out it from Zero

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Speaker 2: and report back to you in the Claude Chapot.

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Speaker 1: So this move is zero saying loud and clear, we're

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Speaker 1: not getting replaced by AI, we are becoming AI.

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Speaker 2: Even then if it's someone else's AI doing the heavy lifting, yes,

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Speaker 2: So what is the key learning here? AI is forcing

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Speaker 2: a rethink of what software actually is and where the

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Speaker 2: value sits.

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Speaker 1: There's a growing fear that large language models like chat,

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Speaker 1: chipts and Claude could eat software.

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Speaker 2: But if an AI tool can generate reports and reconcile

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Speaker 2: accounts and analyze data, then the value is actually shifting

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Speaker 2: from recording the numbers to actually explaining the numbers.

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Speaker 1: So SaaS companies are trying to respond as soon as possible.

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Speaker 2: First, a lot of them are integrating with external AI

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Speaker 2: models into their products.

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Speaker 1: That gets them to market quickly and instantly improves their

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Speaker 1: functionality overall.

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Speaker 2: And like zero b Man, we've seen salesforce through.

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Speaker 1: This, we've seen data bricks. They've done this with a

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Speaker 1: one hundred million dollar partnership with Anthropic.

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Speaker 2: And Snowflake's done it with a two hundred million dollar

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Speaker 2: partnership with Anthropic as well.

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Speaker 1: Then these companies build their own internal AI tools with

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Speaker 1: their own data and workflows.

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Speaker 2: It takes a lot longer, but creates a bit more defensibility.

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Speaker 1: But here's the tension, Juzzy boy. If the external models

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Speaker 1: keep improving faster, which they are, then the internal tools

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Speaker 1: risk becoming a second best insight their own products.

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Speaker 2: So be man. While zero is adding AI to stay ahead,

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Speaker 2: it didn't really move their share price at all.

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Speaker 1: For our second story, Indian Premier League cricket team, the

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Speaker 1: Royal Challenges ben Galaru, has sold to a private equity

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Speaker 1: giant for nearly one point eight billion US dollars.

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Speaker 2: Cricket teams aren't just batting and bowling anymore, be Man,

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Speaker 2: they are global media assets. So tell me more.

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Speaker 1: All right, Well, I'll take you back to two thousand

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Speaker 1: and eight, when you were still eating vitaweeds every single

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Speaker 1: day and flow Rider was topping the charts. That was

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Speaker 1: when the Indian Premier League launched, and.

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Speaker 2: In less than two decades, the IPL has gone from

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Speaker 2: a domestic tournament to the richest cricket league in the world.

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Speaker 1: One of the teams, the Royal Challenges Bengalaru, was purchased

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Speaker 1: for one hundred and eleven million US dollars by an

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Speaker 1: Indian alcoholic beverage company called United Spirits.

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Speaker 2: But by twenty fourteen, Diagio, the Global beverage company, acquired

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Speaker 2: a near fifty six percent steak in United Spirits and

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Speaker 2: rather than sell the cricket team they owned it decided

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Speaker 2: to hold on.

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Speaker 1: But earlier this year, Diagio said that the cricket team

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Speaker 1: was a non core asset to their business and put

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Speaker 1: it up for sale.

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Speaker 2: And now be Man. Private equity giant Blackstone, alongside other investors,

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Speaker 2: have stepped up to the increase, acquiring the Royal Challenges

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Speaker 2: that just stunned out one point eight billion US dollars.

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Speaker 1: And Josey Boy Diagio's near fifty six percent stake would

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Speaker 1: mean they receive a payout of just over one billion

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Speaker 1: US dollars.

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Speaker 2: So it seems like holding on to the team for

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Speaker 2: the last ten years was a pretty good move.

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Speaker 1: Cricket teams are no longer just a group of sports

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Speaker 1: people their genuine assets.

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Speaker 2: So what is the key learning here?

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Speaker 1: Private equity is not just buying professional sports teams. They're

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Speaker 1: buying money machines with uniform.

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Speaker 2: You see, be Man. Modern sports leagues have evolved into

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Speaker 2: revenue generating machines and obviously investors are all over it.

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Speaker 2: You've got long term broadcast deals locked in for billions.

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Speaker 1: Six billion US dollars in Indian Premier League media rights

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Speaker 1: to be exac.

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Speaker 2: You've got sponsorship and advertising revenue with massive audiences over

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Speaker 2: one billion total viewers during the twenty twenty five IPL season,

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Speaker 2: and you've also got a heap of merchandising and licensing

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Speaker 2: opportunities too.

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Speaker 1: And with revenue sharing in the league, it's created a

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Speaker 1: pretty predictable income stream for the franchises.

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Speaker 2: And that predictability is gold for private equity. For our

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Speaker 2: third and final story, David Jones has been delaying payments

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Speaker 2: to some suppliers, giving itself up to sixty days after

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Speaker 2: a sale to actually hand over the cash, and suppliers

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Speaker 2: are not happy handed over DJs. What's going on here? Okay?

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Speaker 2: So David Jones is one of the oldest department stores

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Speaker 2: in Australia, founded nearly two hundred.

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Speaker 1: Years ago, and we know that DJs has been on

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Speaker 1: a journey over the past decade.

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Speaker 2: It was acquired by Woolworth South Africa for two point

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Speaker 2: one billion dollars back in twenty fourteen.

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Speaker 1: And after years of losses, it was sold to a

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Speaker 1: private equity player, Anchorage Capital, for just ninety two and

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Speaker 1: a half million bucks in twenty twenty.

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Speaker 2: Three and then man. While DJ's is supposedly performing a

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Speaker 2: little better now, it's now changed its payment terms with suppliers.

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Speaker 1: And suppliers are not happy jam.

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Speaker 2: You see, in January this year, David Jones told suppliers

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Speaker 2: it needed to extend the payment terms for that month

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Speaker 2: only because they had a new computer system.

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Speaker 1: And supplies were okay with one month.

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Speaker 2: Next minute, they decided to shift paying supplies up to

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Speaker 2: sixty days after products are sold in store, not just

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Speaker 2: for January, but indefinitely into the future.

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Speaker 1: That means they can sell an item today but not

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Speaker 1: pay the supply for another two months.

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Speaker 2: And this is all part of its plan to extend

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Speaker 2: its working capital.

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Speaker 1: So what's the key learning here?

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Speaker 2: Working capital is the difference between a company's short term

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Speaker 2: assets and short term liabilities.

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Speaker 1: In plain English, it's about timing when does cash come

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Speaker 1: in and when does cash go out.

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Speaker 2: For retailers like David Jones, the ideal scenario is pretty simple.

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Speaker 2: Sell products quickly and get paid immediately by customers, but

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Speaker 2: delay paying suppliers for as long as possible because that

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Speaker 2: creates a big cash buffer.

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Speaker 1: For instance, Jazie Boy. If a customer buys a one

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Speaker 1: hundred dollars item today and David Jones doesn't pay the

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Speaker 1: supply for sixty days, that's sixty days where David Jones

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Speaker 1: can use that cash elsewhere to pay.

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Speaker 2: Rent, to pay stuff, invest in stores, or just stay

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Speaker 2: a float.

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Speaker 1: This is called a positive working capital cycle and it

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Speaker 1: is very valuable. So while stretching payment terms can help

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Speaker 1: a business manage cash in the short term, it can

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Speaker 1: damage supplier relationships and trust over time.

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Speaker 2: Flux adam, it is the end of the month and

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Speaker 2: that is when many subscriptions start coming out of your bankcount. Now,

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Speaker 2: if you've got subscriptions that you don't know where they're

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Speaker 2: coming from or when you signed up, the Flux Subscription

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Speaker 2: track up will identify them. To make sure to download

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Speaker 2: the Flux app and check out the subscription tracker.

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Speaker 1: Thanks for listening and we'll see you on Wednesday.