Spenda Ltd (ASX:SPX) delivered strong lending and revenue growth in the September quarter, according to a research report compiled by Raas Advisory Group.
During the quarter, the company generated cash receipts of $716,000, up 81% compared to the corresponding quarter in FY22.
In addition, the average lending yield was 21.23% – a 16% rise from the previous quarter.
Looking ahead, Spenda’s focus in FY23 is on commercialising the Spenda product suite and accelerating the uptake of the lending offer via customer acquisition and expansion of activity in the target industry segment.
Following are excerpts from the RaaS research report:
Business model
Spenda Ltd (ASX:SPX) operates a Software-as-a-Service (SaaS) model for licensing the components of the Spenda platform.
Businesses have several ways to take up the service with the ability to choose which modules will be turned on – point of sale, inventory management, e-commerce, procurement and service management.
Payment services are then available for wholesale and retail B2B and B2C use. Utilising the ledger-to-ledger dataset provided by these transactions, SPX can securely offer on-demand lending, pay later, early settlement discounts and trade finance to its business customers to enable further revenue growth.
Visa’s BPSP (Business Payments Solutions Provider) and Mastercard’s BPA (Business Payment Aggregator) agreements enable a secure payment process.
Q1 FY22 progress as targeted
Spenda’s Q1 showed continued growth in lending and revenue.
The debt warehouse was established and the company is transitioning customers from equity-funded loans to securitised funding.
Average lending yield was 21.23% – a 16% rise from the previous quarter.
The lending portfolio was drawn to $10.4 million on September 30 vs $12.1 million on June 30 with customer limits at $18.4 million. SPX has drawn $7.5 million from the warehouse on September 30.
The company emphasised a new focus on maximising cash and returns by increasing portfolio yield and focusing on larger, integrated, channels for invoice financing offers.
Payment transaction flows rose 120% with a 55% increase in payment volumes as new customer rollouts started to impact.
Both B2B and B2C products saw increased transaction volumes.
Spenda’s revenue is now 95% annually recurring vs one-off sales.
An R&D rebate of $1.6 million was also received post-quarter end.
Valuation is at an early stage with upside from results
The fintech sector is a diverse group with different niche focuses and stages of corporate development.
Similar listed early-stage companies include Douugh, Earlypay and Ioupay.
Share price volatility remains high. Quarterly results are demonstrating progress towards the goal of delivering robust payments and lending platform at scale