Highlights
- IOUpay reported an 8% increase in revenue and 64% decrease in net loss
- Aside from progressing existing partnerships for the myIOU app in Malaysia, the company also entered into new partnership agreements and a marketing collaboration with a major retail bank
- From customer downloads to merchant acquisition to Total Transaction Value, myIOU had a progressive half year
- IOUpay is also working on new technological advancements to the BNPL app, with focus also on its digital marketing strategy
ASX-listed financial technology (fintech) company, Ioupay Ltd (ASX:IOU) -- which is expanding its digital payment and instalment credit solutions in Malaysia -- recently released its Half Yearly Report (period ended 31 December 2022). The report highlights growth on multiple aspects including the gross merchandise value (GMV) of purchases made using the company’s flagship myIOU BNPL service, and progress in terms of partner relationships. Moreover, the company reported continued growth in the Mobile Banking Division, which processed more than 97 million transaction events during the record December quarter.
myIOU was launched in June 2021, meaning the period covered by the latest report represented its performance during the first half of its second year of operation. Below are the major strides.
Increase in revenue, reduction in costs
IOUpay's revenue during the half year ended 31 December 2022 was up 8% year-on-year to AU$4,744,279. This was driven off the back of higher transaction volumes in both the instalment credit business (including BNPL) and the Mobile Banking Division.
The company reported a 64% year-on-year reduction in net loss for the period to AU$2,001,383. This significant reduction was largely attributable to a reduction in costs across the group.
Growth in TTV, modest NPL
TTV is short for Total Transaction Value, and it represents the GMV of purchases made using IOUpay's BNPL service. The TTV for the reported period was over AU$14 million, an 11.6% jump as compared to the prior year. The Income Margin of myIOU, 6.3%, also came higher than internal expectations.
Non-performing Loans (NPL) metric during the reported period indicated modest delinquencies, IOUpay mentions. This resulted from IOU's sophisticated credit checking technology and other targeted processes. The report asserts that IOUpay is "well-positioned" for growth in its second phase of 'Pathway to Profitability'.
Image source: IOU Presentation 21/07/22; Data source: IOU ASX release dated 1 March 2023
Strategic partnerships
IOUpay has been developing "mutually beneficial partnerships" in order to establish sustainable and profitable BNPL operations in Malaysia. In this regard, the company built further on existing partnerships aside from forging some new. The report mentions that the partnership between IOUpay and Razer Merchant Services Sdn Bhd is growing, with over 400 RMS merchants now allowing myIOU as a payment option. In July last year, RMS agreed to expand the BNPL offering and include the full complement of standard payment plans.
A Merchant Acquiring Services Agreement was entered into in July 2022 with Souqa Fintech (which trades as PayHalal). This furthers myIOU’s shariah-compliant offering, with the first such BNPL transactions happening in September 2022. By October last year, myIOU also went live on SOGO Departmental Stores' platform for ecommerce transactions. An agreement was also signed with Simplepay Gateway, the report by IOUpay mentions.
Besides, there was incremental progress during the reported period with respect to the partnership agreement with Pine Labs, with pilot merchants deployed with the BNPL service. IOUpay mentions that product distribution relationships were forged during the period with names like ManagePay, MobilityOne, Revenue Monster, and AsiaPay Malaysia.
A marketing collaboration with Bank Simpanan Nasional (BSN) was another highlight, allowing the company to market to BSN’s large, retail customer base. This is the company’s first collaboration with a major Malaysian retail bank, as IOUpay seeks to leverage its existing relationship network in the banking and finance sector.
Further, more than 1,000 merchant relationships were signed during the half year ended 31 December 2022 through the company’s merchant acquisition initiatives.
Digital marketing strategy
The "sophisticated Digital Marketing Strategy" campaign launched in FY22 continues through this financial year to focus customer acquisition on key cultural demographic groups. Two IOUpay Brand Ambassadors -- actor and model Syafiq Kyle, and actress Priscilla Wong -- produced content throughout the period to increase brand awareness and in collaboration with IOUpay's marketing team on specific marketing campaigns.
Growing consumer base
As at 31 December 2022, myIOU reported over 196,000 consumer app downloads, with over 58,000 activated accounts. Notably, female users, accounting for 57% of activated users, dominated myIOU's reach and activity, particularly with the Fashion, Home & Living and Baby & Kids industry verticals.
IDSB investment
In September last year, a variation in the tranche two completion terms was announced. The company has said that the Second Tranche Payment, ~AU$3.2 million, with respect to the IDSB investment has already been set aside. This means that the full acquisition process, taking the company’s interest to a 34% stake in the Malaysian specialised finance company, would now not need any further investment or outlay. Read more.
Product Launches
A major milestone during the reported period was the announcement related to the launch of myIOU Business+, an offering that allows short-term business to business (B2B) financing to Malaysian SMEs (small to medium businesses).
Also, a co-branded myIOU KA$Hplus Visa (NYSE:V) prepaid card was launched in mid-July last year. Once all approvals are in place with Malaysia’s central bank, the company will integrate this card to the myIOU platform and allow customers to purchase goods and services anywhere Visa is accepted then convert the purchases seamlessly into myIOU BNPL transactions.
Launch of a new, local market-first Bridging Loan product and securing certification of Shariah Compliance were the other major product development highlights of the period.
Through these various product development initiativies, IOUpay says that it is expanding access to new customers and markets, and broadening its base of instalment credit product lines to diversify its growth and revenue.
IOU shares were trading at AU$0.041 midday on 9 March 2023, up over 5% from the last close.
