Credit Clear achieves maiden profit, expects further strong growth in FY23

Credit Clear has achieved profitability for the month of May, two months ahead of forecast, on the back of growth from existing and new clients and its award-winning technology.

Australian receivables management solution provider Credit Clear (ASX:CCR) has achieved profitability for the first time after notching up a record revenue of $3.03 million in May.

The profitability milestone was delivered two months ahead of its forecast and underlines the strength of its “digital-first, end-to-end” strategy.

In April, CCR told the market that it was expecting maiden profits in July, but has now achieved that goal – a $23k operational profit for the month of May.

A combination of strong growth from new and existing clients, along with maintaining a prudent approach to increasing investment in technology have ensured the company’s success.

In addition to operational profitability, CCR has also fortressed its balance sheet following a $7.5 million capital raise at 43c earlier this month.

The company believes the current economic environment, where cost of living is increasing at a rate well ahead of wage growth, will bode well for its business model going into FY23.

“In 2022, Credit Clear has positioned itself to lead the market as an end-to-end credit management provider,” explained Credit Clear CEO, Andrew Smith.

“We’ve done this by providing a ‘best-of-both’ offering that sees our award-winning AI technology combined with an experience-led and customer centric service offering,” he added.

Strong year ahead

Credit Clear intends to accelerate client onboarding in Q1 of FY23, following a succession of material new clients signed in the past three months.

During the month of April, the company signed up 15 new clients who have collectively placed $80 million in debt across 110,000 customer accounts.

These new customers represent a 15% increase in one month, a record increase for CCR which further validates the scalability of its business model.

In addition to those new accounts, an existing Australian client has also significantly expanded its scope of work with CCR, and is expected to add $1.5 million in revenue over the next 12 months.

CCR believes that prevailing economic conditions characterised by high inflation will result in a significant increase in the number of accounts in arrears.

This in turn will provide Credit Clear with the most supportive market environment since its inception.

“The uplift in performance produced for our clients has been quantifiably proven in recent case studies and is contributing towards greater referral volumes from existing clients, and an influx of new clients that we have signed in the past few months,” said Smith.

Credit Clear solves a key market pain point in debt collection services.

The company’s platform is built to benefit from a “fundamental transformation” taking place in the collections industry, which has accelerated the need for a hybrid collection service offering.

Today’s results mark the validation of CCR’s announced business strategy, which included the FY22 acquisition of debt recovery solutions provider ARMA.

Smith told Stockhead earlier the Credit Clear management team now has a ‘good problem’ to solve – how to scale up the sales team and operational divisions fast enough to meet growing demand.

“We exit the 2022 financial year as a profitable market-leading company, and our intention is to reinvest profits for growth,” he said.

“With a strong cash balance and an increasingly supportive economic environment, Credit Clear is positioned to deliver strong growth across every business unit in FY 23.”

This article was developed in collaboration with Credit Clear, 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.