This is what the Flux. I'm Brett and Justin and it's Wednesday, the thirty first of July.
Juzzy Boy, it's easy, Come, easygo for Carl's Junior, the American burger restaurant that hit Aussie shaws in twenty sixteen, and they announced plans to open three hundred stores back then. Sadly, the company has placed its Australian stores into voluntary administration after quite a fullback in consumer spending.
Now, flex Fam. If the words taxable income, accessible income, capital gains tax, if they give you shivers, there is one place, and it is in the Flux Academy. This month we take you through the FY twenty four tax toolkit and how you can maxim my detax return and get big dollars back in your account. Make sure you download the Flux out and check out the Academy this month.
Three refreshing stories Today, Juzzy Boy, Let's do it for our first Canvas has announced that it will acquire AI startup Leonardo Ai in a big deal for Australia's startup ecosystem.
Jeez, Camera's going hard on its aap man, So tell me what's going on here?
Well, Jazi boy. We know Canvas as the design software company that's become Australia's golden child.
Yep, that's thanks to its forty billion dollar evaluation and one hundred and eighty million monthly active users.
Now, Canvas has announced that it will acquire Leonardo Ai, an AI startup which is also based in Australia.
And what does this Leonardo do well?
Leonardo is an image generation company that started actually in the gaming industry, but since then has expanded to other industries like film and even architecture.
Okay, be man, cut to the chase. How much did they pay for it?
Well, Juzi boy, I did some snooping around and the result is an undisclosed amount.
Canva being a little bit secretive there.
Yeah, Well, what we do know is that Leonardo AI raised forty seven million bucks last year and has tripled its users since then to nineteen million monthly active It's been called the.
Next Canva with how rapidly its user base is growing.
But rather than battling head to head, the two companies have officially joined forces.
And this merger out will give Canva exclusive access to Leonardo AI's technology to improve its own.
Set of AI tools. Good call, Jazi boy. So what's the key learning here?
If you can't beat them, buy them.
This acquisition is a strategic way for Canvas to level up its own AI game muchure faster.
Yeah, this deal gives Campa access to Leonardo AI's tech. It also gives them access to its IP, its team of AI experts, and gives them access to the future tech that it will build. Now and we know that acquisitions have been a big part of canvas growth story so far.
Yep, Leonardo AI will be canvas eighth are repeat eight acquisitions since twenty eighteen, and.
It's not the only tech company using the old buy overbuild strategy to get ahead in AI. Get this be man. Apple has purchased more than twenty AI startups since twenty seventeen, and Microsoft and Meta have purchased more than ten as well.
Wow, so Canvas inched ahead with its new acquisition, But the AI race well and truly continues.
For our second story, Rex Airlines shares are in a trading hole as it tries to find a way to stay out of administration.
First it was Bonza and now REXI Rex as well. So tell me what's going on here? Juzzy boy I.
So REX, or it's full name, Regional Express, launched back in two thousand and two as an airline specialized in regional routes around Australia.
We're talking Cans to Townsville or Broken Hill to Dubbo.
Don't forget Bernie to King Island as well and.
Josey boy Well. REX listed on the ASX in two thousand and five. It really became prominent in Australia during COVID times.
And that's because in twenty twenty one, REX expanded its flying roots to include the Golden Triangle of Australia. That would be flights between Melbourne, Sydney and Brisbane, which are the busiest routs in Australia, and then Man. When Virgin Australia went into voluntary administration in twenty twenty, REX saw its opportunity to own a big chunk of these roots.
So Rex borrowed one hundred and fifty mil in convertible notes from a private equity firm which goes by the name of PAG and.
Then Man and now it's time to pay back PAG.
And this is a worry for REX, which recently has had major board disputes and has now gone into a trading hole.
In fact, they've paused any bookings on New Fly for.
The next two weeks, all part of Rex's plans to hopefully avoid going into voluntary administration.
So tell me what is the key learning here.
Convertible notes are short term loans that convert into equity at a predetermined conversion event and be Man. This predetermined event that you speak of could be a whole range of things. It might be the sale of the company or an IPO.
It might be if specific performance targets are met, but often it's at a specific date called the maturity date. And be Man, the original amount lent plus any interest will convert into equity.
So juzy boy, it's unclear if or when PAG will convert these shares.
And b Man. Sadly, Rex ain't the first Ossie airline to struggle under the weight of their debts. No, we know.
Bonds A fell earlier this year, Virgin Australia fell during COVID but is back, and of course Tiger Air.
For our third and final story, McDonald's sales have fallen for the first time in thirteen quarters because apparently Macu's big max are pricing people out of the fast food market.
I reckon, Juzzi boy. The secret to success is just making sure the ice cream machines are actually working at McDonald's.
Tell me more. Okay, So MACI D's is the home of all comfort foods. You're salty Salty Chips, you're big Macburgers, you Mcflurri's.
And don't you forget the home of Ronald McDonald, who's actually I think been killed off by the Macas marketing team in reason.
Is interesting, true, but the man, comfort food and fast food apparently comes at a pretty hefty cost these days.
Macas reported that global sales fell one percent in the second quarter of this year, and the man, it's the first quarter in over three years that it's gone backwards.
So what's been the cause of this downfall? The biggest hip for Macas has been low income consumers who have cut back on their Macas visits.
But there is some good news. It's five dollars meal deals have sold above expectations.
So now Macas is going to lean back into its value deals to bring back its customers. Interesting, So, what is the key learning when you stray too far from your winning playbook? You're risk losing your competitive edge, Douzy boy.
We know that Macas has always positioned itself as good quality taste wise and good value money wise.
In fact, be man During previous economic downturns, Mac's has actually brought in more customers.
But over the past few years, with the rise of raw material costs, mac has significantly increased its prices.
Get this, the average prices of Big Mac in the US is up twenty one percent since twenty nineteen.
Or the price of French fries here in Australia, which I've been keeping my eye on, up fifty percent since twenty nineteen, Josie Boy.
And as a result, for some Macus has actually lost its reputation for value as well as its customers.
Many low income customers are heading to other fast food chains like Burger King or Domino's.
Yep, burging scene at sales grow by leaning on the Macca's value playbook.
So now Jusiboy, Maccas is scrambling madly to create new value deals so it can bring back dem customers.
Flux iam Max time is one of the most confusing and kind of painful times of the year. We actually need to know what you're doing. We have it all covered in the Flux app with the FI twenty four tax toolkits. Make sure you download the app and check it all out.
Thanks for listening, and we'll see you on Friday.