On The Horizon
On the Horizon will be a spinoff of WTR's Small-Cap Spotlight focusing exclusively on our Horizons client as well as other micro- and nano-cap companies.
On The Horizon
Treasure Global (TGL): Building an Engagement Layer for Southeast Asia's Digital Economy
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
Sam Teo, Acting CEO of Treasure Global, Inc. (NASDAQ: TGL), joins the WTR On The Horizon podcast to walk through the company's ZCITY Super App and the strategy behind it. Host Joe Brunetto, Director of WTR Horizons and Business Analyst at Water Tower Research, guides the conversation from the founding vision through the platform's dual-sided consumer-and-merchant model, its "coopetition" positioning alongside players like Grab and Shopee, and the AI-driven "data flywheel" at the center of the business.
Sam and Joe dig into the catalysts management is watching—ARPU stepping up from $213 to $1,506 in a single quarter, rising engagement, and AI and enterprise initiatives including the V Gallant cloud-infrastructure agreement, the Silica-AI partnership, and the ELMU Smart Campus contract. They also cover recent financial momentum against an ongoing investment phase, Malaysia's home-market runway, and the planned rollout across Indonesia, Vietnam, Thailand, the Philippines, and Japan, closing with the proof points investors should watch over the next few quarters.
Listen on Apple Podcasts, Spotify, or at www.watertowerresearch.com.
WTR on the Horizon podcast. I'm your host, Joe Bernto. I'm director of WTR Horizons and business analyst here at Watertower Research. In today's episode, I'm pleased to be joined by Sam Teo, acting chief executive officer of Treasure Global Inc., Nasdaq Ticker Symbol TGL. Good morning, Sam, and thank you for joining us on the podcast today. We recently joined, we recently launched our initiation of coverage on Treasure Global. So I'm really excited to take a deeper dive into the company and the story, the strategy, and the growth of the opportunities there. So happy to jump right in here. Sam, welcome to the podcast. For investors meeting Treasure Global for the first time, can you give us, you know, maybe a little bit of an elevator pitch? You know, who is TGL? What are the problems you're solving in Southeast Asia's digital economy?
SPEAKER_00Oh, sure. Thanks for having me. Uh, Treasure Global is a digital e-commerce and engagement platform built around our Zach City super app. So at the simple level, we connect consumer and merchants in a single ecosystem. So users can discover, spend, earn rewards, and keep coming back. In contrast, merchants get more repeat customers and lower acquisition costs. And the problem we are solving is fragmentation. In Southeast Asia, users jump between multiple apps to shop, pay, and correct the rewards. Merchants, especially for the small media enterprise, struggle to understand and retain their customer. So we sit in the middle as an engagement layer, helping both sides get more value for every transaction without replacing existing payment or e-commerce system.
SPEAKER_01Awesome. Excellent. Appreciate you again, giving us a quick overview there. I think that gives us a great starting point into today's conversation. So I think even if we take a step back and kind of take us back to the almost the founding vision here, um, how did the company evolve into the Z City Super App? Um, you know, what was the insight about Malaysian consumers and merchants that shaped the platform?
SPEAKER_00Yeah, we started as a simple reward platform, but over the time we saw something important. Rewards alone is not enough unless you are connecting them directly to the merchant value or real transaction behavior. So Z City evolved into a broader ecosystem, e-commerce, loyalty, data, and non-AI-driven personalization. The core idea has stayed the same. Make every transaction more wearable for both the consumer and the merchant.
SPEAKER_01Perfect. Again, simple and easy there. And then I think you know, going off of that, it looks like about you know, Southeast Asia has about 545 million internet users, I think, as of maybe some of the recent data that we've seen. Yet payments, e-commerce, and and loyalty remain highly fragmented markets. Uh, what why is super app model you know the right answer to that fragmentation? And why is TGL position to deliver it the you know the best?
SPEAKER_00Yeah, now the region is very fragmented. Different apps for payments, shopping, voucher, and loyalty is all disconnected. A super app style model works because it's bringing those touchpoints together into a single loop, increasing the repeat usage. But we are not trying to replace Grab Shoppy or other payment model. We see alongside them adding a layer that improves engagement and retention, especially for the small and media enterprise that needs stronger customer stickiness.
SPEAKER_01Excellent, excellent, great. Uh, so before, you know, just as a quick one right here, before we kind of move into a little bit more about the Z City platform and and more about your business model, is there anything just about the you know the TGL story that you you'd want to you know let investors uh you know hear before again before we move on?
SPEAKER_00Sorry, my eye is not clear.
SPEAKER_01No, no, no worries. We could we could we'll cut that part out. Um I was just I was just wondering and and if if there you go.
SPEAKER_00I'm I'm sorry, because I I I saw that my background sound is very noisy. Oh, maybe I'll move in other places. Just give me one minute.
SPEAKER_01Yeah, yeah, no problem. I can oh you're you can I can I can't hear it on my end, so it's all good. Yeah, just give me one minute.
SPEAKER_00Yeah, sorry.
SPEAKER_01No, no worries.
SPEAKER_00Yeah, now we can look at it.
SPEAKER_01It's better on your end now? Yeah. Okay, perfect. Cool. All right, yeah. So uh again, we'll we'll we'll cut that part out there and we'll just we'll start right here again. Um, so again, perfect. I appreciate you taking us through the the TGL story there a bit. Now, maybe if you could walk us through uh Z City from a user perspective, uh you know, what does the spend earn redeem cycle look like in everyday life and how does that rewards on rewards model keep users coming back?
SPEAKER_00Yeah, I think that for all the user baskety, they have to look for the super app, which is then cover the reward to cover their monthly spending. So at Z City we build as an aggregated, that's why we connect the both merchant and user together and provide the payment so for users can make the payment easily and also get the reward for the next purchase. That's why we are here. We are connect, we are aggregated. We are not replaced for any super like rep or shopping, but we are still alongside with them.
SPEAKER_01Awesome. And and then so at least, and correct me if I'm wrong here, but you serve two customers, right? So it's the consumers and the merchants. How do you monetize each side there? And how does the dual-sided model reinforce itself as the platform scales?
SPEAKER_00Yeah, we serve both consumer and merchant. That's right. Consumer use the app for reward and discovery, and merchant will pay for the participation, campaign, and platform services that help them to drive the repeat customer. So the key is this as a merchant to see better repeat sales, they will stay longer. And as a user to get more value, they will come back more often. Both sides reinforce each other.
SPEAKER_01Excellent. And um and I guess as we look at some differentiation, at least is you know from what I saw in my perspective, uh, it seems like you're you and your company kind of highlight, you know, this this AI-driven personalization. So it's really this data flywheel that you have. How does the user data actually translate into better targeting, higher engagement, and really it's just a stronger overall ROI?
SPEAKER_00Yeah, every interaction inside the app will teach us something. With the data, we should be knowing what user buy, when they buy, and what they respond to. That's allows us to personalize the offer and campaign better over the time. So with better targeting means better conversion for merchants and better relevance for users. So the loose key compounding. That's why we always call our data frywill.
SPEAKER_01Excellent, excellent, that's great. And then just kind of as a last one, in terms of just kind of the your business model here. Uh, you just you describe the model as asset light. Uh, could you just talk a lot a little bit about what that means um in practice for capital requirements and operating leverage, especially as transaction volumes grow?
SPEAKER_00Yeah, we don't have heavy physical infrastructure, so that keeps the model is more flexible. As transaction volume growth, costs don't scale at the same rate. So we naturally get operating leverage over the time.
SPEAKER_01Perfect. That's great. No, again, excellent. I think we just did a great overview of the business model there. Um, and if anyone has any questions, you can obviously submit them uh via our portal and we will get them to TGL as well. So let's let's turn to catalysts here. Uh the metrics that jump off the page for me at least, uh, definitely ARPU, uh, up from $213 to $1,506 in a single quarter. It's a 707% increase. Could you talk a little bit about what drove that that step change and how sustainable it is?
SPEAKER_00Yeah, they're definitely will increase and reflect the stronger monetization but active user. They are not just more user, but more activity but user and more value but transaction. So it's driven by higher engagement and better contribution for our loyalty program, and also the mature program and campaign. This is a strong signal, but not something to model as linear every quarter.
SPEAKER_01Absolutely. No, I agree. And and so you just touched on this a bit, and I guess it's around that engagement quality, so and and how it's shifted really, you know, you know, pretty dramatically. Um, so I I guess I think it said about 70% of paid users now transact three or more times per quarter versus about under 5% a few years ago. Um, what does that what does that tell you about where the platform is and it's in really the scaling curve?
SPEAKER_00Yeah, now we are seeing user move from the optational use to repeated usage. So a much higher share now transact multiple times per quarter. That's why the results tell us the platform is becoming part of everyday behavior, not just for the fresh new or just a temperature. Actually, they are repeat sales every day.
SPEAKER_01Excellent, excellent. Great stuff there. And you know, kind of moving into one of the catalysts, and you know, one of the catalysts that's hard to move away from right now is AI. And you've you've made some bold moves in AI. Uh, the AI Cloud Infrastructure initiatives backed by, I think it was uh a 16 million US uh dollar service agreement with uh V Gallant, uh the Silica AI Partnership, uh, and Malaysia's first AI digital human uh live commerce hosts on TikTok. Uh, which of these AI initiatives do you expect to contribute revenue first? Uh, how do they really fit into your core platform?
SPEAKER_00Yeah, actually, we are working across the three areas. The first one should be the live commerce tools, enterprise digital solution, and also the AI-driven content experience. So we call this is a digital human. I think the first revenue you're expected to see is from the enterprise deployments because those are structured, service-based, and also closer to commercial raw-up.
SPEAKER_01Awesome. Great. No, exactly what we're looking for there. And then if we switch a little bit on the uh to the enterprise side, you also want an estimated, I think it was about 2 million US dollars for a smart campus contract with ELMU education group. Um, how big is this? Is the is the enterprise and smart infrastructure opportunity for you? And is there a pipeline behind that that first win?
SPEAKER_00Yeah, the project is very important because it's related to our enterprise capability. It's not just a contract, actually, it's a reference site. Once we have one working deployment, it's become repeatable across other institutions and also enterprise client as well. So this is open the second growth track alongside our consumer ecosystem and also strengthen our revenue stream.
SPEAKER_01Perfect, perfect. And so, and then just again, as we go through the some some near-term catalysts, I think it looks like uh Tasdy, your TASD, your your FMB merchant platform is in kind of a redevelopment phase right now, and you have an I think it's an MOU with the Malaysian Retail Chain Association covering 500 plus merchants now, and I think that's what's that more than 40,000 outlets. Uh, what should investors expect from that relaunch?
SPEAKER_00Yeah, now Tased is being rebuilt as a part of our merchant ecosystem strategy. So basically, we are strengthened and enhanced all the back end, also including the AI-driven technology. And with the Mar CA, we again access to a large retail network. And this is very important because the goal is to bring those merchants into our engagement and load this system. And post-relaunch is about skill and activation across the network. I believe this is really success in coming months. Awesome.
SPEAKER_01Excellent. And and I guess as you know, again, just as we go off of that and kind of close up on some of the catalysts here, um, before we move on to a little bit more financials and some and some economics, uh, could you tell us a little bit more about your digital wallet and exchange infrastructure and your blockchain ambitions? You know, what role does Web3 play in the broader Z City ecosystem?
SPEAKER_00Yeah, this is a longer-term layer, also long-term strategy. This is about enabling more flexible value exchange inside the ecosystem. So we make it more transparency and also the future digital utility. It's not the core revenue driver today, but part of the border platform architecture. Now we are building it. And we believe for coming another audience pool, especially for the digital finance. So this water definitely we can tap to the market.
SPEAKER_01Excellent, excellent. Great, great stuff there. Good, good way to wrap up. Uh, you know, I think that segment, and I think move on to or switch gears a little bit into some some of the financials and economics that we've been seeing. Uh, it looked like in your latest results, showed third quarter revenue up 125% year over year, uh, and nine-month revenue up 135%, actually, uh, led by more than 6x growth in product and loyalty program revenue. Uh, I thought that was super interesting. Wondering if you could talk about what's driving that momentum and do you how how repeatable is this? Yeah, and sustainable, really.
SPEAKER_00Yeah, sure. This revenue growth is mainly driven by the higher transaction activity every day and also stronger contribution from the platform and also our loyalty program. But more important that the headline growth is engagement. So normally users are transacting more frequency and more consistently. That's why we're driving modular uh monetization over the time. Excellent.
SPEAKER_01And I think you know, we've definitely seen that uh translate a little bit to your balance sheet. So you're you've strengthened the balance sheet meaningfully over the past year. How does your current liquidity position support the investment road app? And what are your funding priorities from here?
SPEAKER_00Yeah, basically, we are strengthening the balance sheet, which gives a more flexibility. And we are also prioritizing three areas. First is scaling the core platform, expanding the enterprise and AI, and also improving operation efficiency. And we are investing, but in a discipline away.
SPEAKER_01Okay, good. And and just kind of you know, as we look at the company as a whole, you know, uh, you know, you're still kind of in an investing phase, and I mean we're seeing we're still we're still seeing you know some net losses, but wondering if you could walk us through the path towards improving margins. Where does operating leverage show up first for you? Excuse me.
SPEAKER_00Uh yeah, we are still in the investment phase and margin improved as revenues scale faster than fixed cost, and especially in technology and platform development. And the T the key things is to watch an engagement frequency, repeat transaction and monetization, but active user. Those are the real indicators of efficiency.
SPEAKER_01Awesome. No, that's excellent. I appreciate you kind of calling those out too. That was actually going to be a follow-up of mine is kind of maybe what operating metrics we should look at. And uh, but I think those are great ones that to keep an eye on as as we watch you kind of scale your margins. Um uh so if we switch gears again, I know we're coming closer to you know the top of our time here together, but uh, but we do want to squeeze in you know just a few more here. Uh when we look at the market market opportunity and kind of competitive position, uh you're at roughly 8% penetration of Malaysian internet users, um, I think from the latest data with 2.7 million registered users, uh significant headroom there, especially you know, at home in Malaysia. At the same time, you've outlined expansion into Indonesia, Vietnam, Thailand, uh, the Philippines, uh, plus Japan too, across 2025 to 2028, uh, in your rollout. How do you sequence um you know really home market growth versus your regional expansion?
SPEAKER_00Yeah, Malaysia sure is still our foundation. So started, we are focused into Malaysia, but we use it to refine the model, improve the scalability. That's why we will continue to expand step by step into the Southeast Asian market and with the similar digital behavior. Because this is a neighboring country and the spending heavy, spending power actually quite similar with Malaysia. That's why we are still focused in Malaysia and we're coming to expand to other countries as well.
SPEAKER_01Perfect, perfect, exactly what we're trying to get at there. And then, of course, you know, the region does have some giants. Uh, you know, you have touch and go, we have grab pay, go to shopping. Uh, you just you I think your company has described, and you've in past, you know, uh set sayings have described a uh co-opetition approach almost. So operating as a rewards and merchant engagement layer on top of dominant payment rails rather than competing head on with these companies. Can you explain that positioning, why it works for SME merchants in particular?
SPEAKER_00Yeah, as I shared just now, we are the aggregator. Actually, we are not trying to replace any payment system or any super app. Actually, we are sit atop that as an engagement and loyalty layer. That's where we add our value and helping the merchant, and especially for the small, medium enterprise, to get the better retention and repeat customer without needing their own compressed system. So, in many cases, we're actually complementing existing ecosystem rather than compete with them. That's why we are the aggregator super app.
SPEAKER_01Excellent, excellent. Uh, again, really great, really great on kind of the market opportunity and competitive positioning there. And I think, you know, you know, as we look to kind of uh you know, kind of close out some of our topics here today, you know, you've recently actually stepped back into the CEO seat. Um, wondering what your your top priorities are for the next, you know, call it, you know, year to 12, you know, 12 months, and and how you define success a year from now.
SPEAKER_00Yeah, as an acting CEO, so my focus over the next two months is right here. So this is uh come down to the three priorities. The first one, sure, we want to increase the monetization for our existing user face and do more channel. And second, scale our enterprise and also add revenue stream. And last but not least, to improve the operational efficiency and move towards sustainable and profitability.
SPEAKER_01Awesome, awesome, excellent. Uh, not I don't want to you know be too repetitive here. I think you kind of touched on some of these, but maybe if there's anything deeper you could go into here, um, what are what would you say the key milestones investors should look for over the next two to three quarters? Um, you know, really as proof points that the strategy is working.
SPEAKER_00I think for investors, there are three key uh scenes to watch. The first one, sure, is a stronger engagement trend across the platform and growth in the enterprise contract, wins, and pipeline conversion, and also early revenue contribution from our AI initiative. And together, this will demonstrate the execution is on track.
SPEAKER_01Awesome, awesome, perfect. Uh, and really almost just for I think for our last one here, and maybe last two, actually, I'll kind of you know I'll split this into two here. Um, for the investors listening today and listening in the future, uh, you know, what what's maybe like the what's maybe the one thing that you want them to remember about the treasure global story? And secondly, is there anything from today's conversation that you think we've missed, not touched on, or you just want to highlight more before we we finish off here today?
SPEAKER_00Yeah, sure. I think Treasure Global today is more meaningfully different from a few years ago. We start as a just city, but now we are already stuffed for other businesses as well, and also do more diversify for our ecosystem. I think we will evolve from the reward-based platform into the broader digital ecosystem that combines consumer engagement, merchant, merchant on board, and also emerging AI capability. Now we are we are still early in the journey, but the direction is very clear. So SAQ consistently improve monetization and also build a scalable and sustainable business over the time.
SPEAKER_01Excellent. That's perfect. Thank you for that, Sam. And I think that also brings us the time for today. So, Sam, really, thank you so much for joining me today. Um, and thank you for everyone else that's tuning in today. So, really, don't forget to subscribe to the On the Horizon podcast and visit watertowerresearch.com to stay up to speed on all of our small cap research reports, podcasts, fireside chats, and conference schedules. Uh, we'd definitely look to uh have Sam on again as we look to uh dive deeper into the story throughout the year. Uh we'll see you next time on W2 or On the Horizon. Thank you.