Credit Clear maps out three-year plan, eyes triple market share in Australia
Credit Clear says its unique technology advantage will allow the company to increase market share and expand internationally over the next three years.
Provider of technology solutions to the debt collections industry, Credit Clear (ASX:CCR), has just mapped out a three-year plan to triple its market share in Australia.
The company anticipates revenue to grow to $100 million per annum over this period, underpinning an EBITDA growth to $25-30 million per annum.
CCR currently has a 1.4% market penetration in the Australian debt collection industry worth $2.5 billion.
The company says the three-year growth strategy will increase this market share by around three times to 4-5% of the total addressable market.
“The first part of the plan is organic growth,” Credit Clear’s CEO, Andrew Smith, told Stockhead.
“I think we are in a very strong position in terms of having a leading technology in this sector, which will underpin our organic growth.”
Smith sees an opportunity in the bill collections space as inflation, interest rates and households’ default rates increase.
“At some point, this will have a dramatic effect in terms of credit providers needing assistance to manage their customers through that late stage cycle where they might not necessarily be able to pay on time,” he said.
“So having a frictionless way to collect these debts by using a technology like ours will be transformational for the industry.”
At the moment, CCR’s revenue run rate is $35.7m which is being generated from around 1,000 active clients.
The company has been adding 30 clients or so per month, but sees real opportunity in signing up materially larger clients like ASX 100 companies, “tier one” governments, and unlisted organisations.
“Our next target would be the NRMAs and the IAGs of the world,” says Smith.
“We need to demonstrate case studies in other markets like the federal government for example, where there are very large volumes of outstanding debt that are well publicised. If that happens, we could pave the way for ourselves to reach those goals.”
Smith is also excited about the way organisations are slowly moving towards a tender process when making their decisions.
“Our success rate on tenders thus far have been very, very good. So we’re confident not just in winning any business directly, but also winning business through tenders.”
Managing the group’s cost base will also be one of the priorities in CCR’s three-year plan.
Smith believes there are still lots of cost synergies and efficiency gains to be made between Credit Clear and ARMA, a company that CCR acquired in December last year.
Up-selling and cross-selling to ARMA clients will also be a priority next year, where CCR will be looking to move ARMA clients upstream into CCR’s digital first, first-party collections platform.
Jason Serafino, the chief product and technology officer at Credit Clear, told Stockhead the goal is really to get the outcomes for the clients at any stage of the debt collection cycle.
“We believe that you can get a better experience for customers, and actually get better results for them in the process.”
But Serafino says that ultimately, the company likes to be very much upstream in the debt collection process when serving clients.
“Coming in as a collector at a later stage of the collection process is easier.
“A very successful strategy we’ve found is to go in at that stage and say ‘look, we’ve got this great digital platform, a great team, and we can offer you this hybrid solution’.
“So there’s obviously an advantage to being all the way up there because you’re really upstream of everybody else. You’re deeply integrated, and it is a very sticky business,” added Serafino.
In September, Credit Clear won “Best use of AI” at the 7th Annual Australian Fintech Awards for the second year in a row.
Serafino explained that his team has trained its AI technology on tens of millions of interactions, to understand the best treatment for a customer on a day-by-day basis, looking at the kind of customer and the kind of debt they have.
“Our system has thus become very intelligent about knowing how to get an engaged customer,” he said.
“It isn’t just a matter of sending one message to customers.
“We have this workflow system that sends a series of messages to customers, by using a certain language and a very sophisticated approach,” Serafino added.
Credit Clear will continue its expansion into international markets over the next three years.
In April, the company deployed its digital platform overseas for the first time when it signed a deal with TechHub in South Africa.
The company’s cloud-based technology allows scalability and the ability to deploy into any region in the world.
Smith says the United Kingdom market represents the next target for Credit Clear.
“The UK market probably represents the most opportunity for us because of the similarities in the regulation, and the ease in which we could deploy our technology,” he said.
And going into 2023, Smith believes there is a real opportunity in the tech space to look at companies that have a great outlook.
“Investors need to look at companies like us which have a strong management and are able to pivot quickly to a market where it’s not about growth at all costs, but about sustainable growth and strong fundamentals,” said Smith.
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.