Change Financial delivers on quarterly metrics as it looks to expand its Banking-as-a-Service platform
The completion of Phase 1 of its three-phase strategy and solid financials has put Change Financial in a good position to accelerate sales.
ASX fintech Change Financial (ASX:CCA) has released its quarterly trading update to investors today – announcing substantial progress in its three-phase strategy, as well as delivering solid financials for the quarter.
As announced last week, CCA had completed Phase 1 of its three-phase strategy, which focused on the integration of its technology suite following last year’s acquisition of Wirecard’s Australian and New Zealand assets.
The company said that it has now successfully integrated the existing certified processing system with the acquired payments management platform.
With that completed, it is now ready to progress to Phase 2, which is to get its Customer Ready Platform available to customers by the first half of FY22.
An initial market assessment has been made by CCA, and it was concluded that a significant global market growth opportunity does exist and CCA is in discussions with a number of existing and new customer regarding moving to Change’s BaaS Platform.
The company estimated that combining its two platforms – the certified processing and payments management platforms – will bring forward Change’s previous product development roadmap by approximately 24 months. The final results of the market assessment and the go-to-market strategy will be available later in the fourth quarter of FY21.
CCA has developed scalable payments technology solutions for businesses and financial institutions.
The major benefit of its platform solution is that customers can offer mobile banking applications under their own brand, effectively providing them with a white-labelled Banking-as-a-Service (BaaS) solution.
The technology also includes a global payment testing simulator that allows banks to test ATM, POS, interchange, regression and stress test cases concurrently, using a single system.
The platform has an extensive list of features – which includes an API that allows customers to design and build their own payment solutions without legacy issuer processors. In addition, it provides business intelligence data that allows real-time analytics on customer and merchant behaviour.
Interestingly, one of the platform’s features is InstallPay, a BNPL platform that allows payments to be split directly to customer debit, prepaid and credit cards without needing to use a third-party BNPL provider.
Up until the end of March, the platform is used by more than 125 customers in 36 countries globally, including the Philippines’ largest bank, BDO Unibank.
CCA processes more than 16 million credit, debit and prepaid cards worldwide with approximately 50% of those cards being VISA, 40% Mastercard, and the rest comprising of Amex, Diners, JCB and UnionPay.
The company says that during the quarter, it has built several pipelines of international sales opportunities, which include the US, South America, Thailand, Cambodia, and the ANZ.
In South America specifically, progress was made as a result of engaging with an existing global client base that has embraced the company’s new technology roadmap.
To accelerate its international sales further, CCA has recently appointed a new business development manager who will spearhead its global sales efforts.
Performance for the quarter was strong, with receipts from customers totaling US$2.88 million, an increase from the previous corresponding period (pcp).
This solid result was delivered despite deferrals of project work relating to client internal delays and the holiday period, which the company expects to be realised over subsequent quarters.
The all-important annual recurring revenue (ARR) also increased to US$4.4 million, from US$4.2 million in the pcp.
The growth in ARR was mainly achieved through the onboarding of customers during the quarter following completion of contracted projects.
Its cash position at the end of the quarter increased to US$4.48 million from US$4.19 million in pcp.
CCA believes it is serving a potentially huge market.
Citing a report from the Boston Consulting Group, the company says the global payment revenue exceeded US$1.9 trillion in 2020, with COVID 19 accelerating non-cash payments.
According to the report, the global non-cash transactions are projected to grow from US$684 billion in 2019 to US$1.5 trillion in 2025.
To accelerate its BaaS offering, CCA will look to partner with customers, banks and other fintechs over the coming months.
The company says it has maintained a healthy contracted pipeline of project work, the majority of which is scheduled to be delivered over the next six months.
The CCA share price has doubled over the last 12 months, to trade at 12c today.
This article was developed in collaboration with Change Financial, 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.