Above weight: IOUpay delivers 25% jump in customers

Malaysia-focused fintech IOUpay has had a very productive start to the June quarter, with all key growth metrics pointing upwards.

Fintech IOUpay (ASX:IOU) saw its BNPL volumes increase by 15% in the first half of the June quarter, versus the previous half quarter period.

From 1 Apr to 15 May, IOU transacted $2,041,256 on its BNPL platform, an increase of 15% from the 16 Feb to 31 Mar period.

During this period, its Net Transaction Revenue was $145,660.

The company also saw continued growth in consumer and merchant sign ups during the period.

A total of 3,675 merchant outlets have now been onboarded, representing an increase of 7% since March 31.

On the consumer side, a total of 85,552 consumers have downloaded the myIOU app, a 25% increase since March 31.

IOU continues to report modest delinquencies amongst its customers, with a Non-Performing Loans rate of just 0.51%, or $133,183.

This reflects the company’s strong credit quality control strategy and its targeted consumer acquisition process.

The process includes sophisticated credit scoring technology which authenticates customers and independently checks credit profiles.

Rising merchant and consumer activations

During the period, 56 new merchants operating 282 outlets around Malaysia were added to the myIOU platform.

New merchants were added to 11 industry vertical categories, which include automotive, beauty & wellness, electronics, fashion, and home accessories.

Notable businesses or brands newly onboarded include: Elken Global, Lean Concepts, and Mac City.

On the consumer side, almost 75% of consumers who have downloaded the myIOU app complete the onboarding process. Significantly, more than 30% of those consumers who download the app go on to complete a transaction.

IOU says the growth in both merchants and consumers was a result of its ongoing digital marketing strategy, supported by the Malaysian Government’s easing of COVID-19 restrictions.

SOGO agreement update

In April, IOU announced that it had entered into a deal with SOGO Department Store in Malaysia for the provision of myIOU BNPL services at SOGO’s department stores.

This covers both SOGO’s point- of-sale (POS) and e-commerce payment platforms.

IOU says it expects to launch myIOU on SOGO’s POS platform for instore purchases by the end of the June quarter (Q4 FY22). Integration of myIOU with SOGO’s e-commerce platform is scheduled to ‘go live’ during the September quarter (Q1 FY23).

Razer Merchant Services update

In the March quarter, IOU reported that RMS had onboarded a total of 290 merchants.

Following a review of the merchant listings, the number of merchants on-boarded from the first two batches has now been reduced to 232, as at the time of writing.

IOU says that it continuously reviews and assesses the merchants offering myIOU BNPL services, to ensure alignment with its brand values and anticipated transaction activity levels.

IOU has implemented a special promotional campaign for RMS to onboard qualified merchants. This will replace the previous batched processing and run until the end of the September quarter (Q1 FY23).

IDSB investment update

IOU says it expects a downward adjustment to the overall purchase price of IDSB, after reviewing IDSB’s numbers for FY21.

This will be reflected as a net reduction to the amount of the Second Tranche Payment, which is part of the acquisition deal.

IOU is now working with the vendors and IDSB to finalise the actual amount of the variance in profit before tax, and hence the corresponding reduction in the value of this Second Tranche Payment.

In September last year, IOU announced that it was acquiring 42% of Malaysian company I.Destinasi Sdn Bhd (IDSB), in a deal worth 126 million ringgit (or around A$41.3m at the then exchange rate).

IDSB is a specialised finance company focusing on providing instalment-based consumer credit services to civil servants for and on behalf of Malaysian banks.

Under bi-lateral collaboration agreements with its Malaysian bank partners, IDSB acts as a specialist contracted service provider for the banks.

It provides credit processing, account set up and ongoing account management services for the banks’ customers that generate recurring revenues for IDSB.

COVID-19 and economic update

All states, territories and major economic centres in Malaysia have now moved into Phase 4 of the Government’s National Recovery Plan (NRP).

Phase 4 provides for the re-opening of all economic sectors, interstate travel (subject to certain protocols), with no gathering limits.

During April and into May 2022, there has been a significant decline in daily new COVID-19 cases following the peak in late March predicted by Malaysia’s Ministry of Health.

More than 80% of the population is fully vaccinated, and 49% have received booster doses.

Malaysia’s economic activity also continues to improve, with the economy expanding by 5% year-on-year in the March quarter, up from 3.6% in the December quarter.

Bank Negara Malaysia has released a statement saying that it expects the recovery to continue through calendar 2022, subject to any future COVID-19 variants.

This article was developed in collaboration with IOUpay, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.