Fintech lender MONEYME continues to build on momentum, delivering strong returns in Q3
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MONEYME’s robust quarter is expected to build momentum into FY24 as margins increase on reduced corporate debt.
Non-bank lender MONEYME (ASX:MME) has once again produced a solid quarter, building on the momentum from prior quarters.
In Q3, MONEYME increased its gross revenue YoY by 75% to $61 million. Contracted revenue was $375m, up 9% YoY, while the company’s ongoing focus on margin protection saw Net Interest Margins increase by 18% YoY to 13% in the quarter.
Building on the strong profit result of $9m in the first half, MONEYME recorded >$7m in statutory net profit after tax (NPAT) for Q3, with another profitable month in March adding to the profit result for January and February that was announced at the same time as the company’s recent capital raise.
Underpinning the solid performance was MONEYME’s $1.18 billion loan book, which has seen a slight drop since MONEYME announced its shift in focus from high growth to profit delivery at the beginning of the financial year but an increase of 2% YoY.
The credit profile of MONEYME’s loan book continues to improve through the company’s ongoing focus on credit risk management and targeting of higher credit quality borrowers, ending the quarter with an average book Equifax score of 718, compared to 714 in the prior quarter and 695 in the third quarter of FY22.
As a result, net losses have reduced in Q3 from the prior quarter in line with management’s expectations, as the significantly higher credit quality of the book starts to take effect.
MONEYME’s CEO Clayton Howes says he is pleased with MONEYME’s strong financial performance and momentum in Q3.
“We have protected our margins through targeted pricing and cost management, and continued to elevate the credit profile of our loan book for safer risk management whilst the macroeconomic uncertainty exists,” Howes said.
“It is also pleasing to see net losses on a downward trajectory.”
In the quarter, MONEYME secured a fully underwritten $37m placement, which will be subject to shareholder approval at the Extraordinary General Meeting on 17 May.
Funds raised will support the planned $32m paydown of the short-term corporate debt that was used to finance the acquisition of SocietyOne as well as balance sheet growth – which in turn will support increased profits in FY24.
“The $37m equity placement announced on 30 March was an important achievement for the business and a testament to investors’ strong confidence in our business model, despite the tight capital markets,” said Howes.
“The funds raised in the placement will allow us to reset our funding and liquidity position, and strategically position the business for profit and sustainable growth.”
MONEYME says its cash position of $14m in Q3 is expected to increase in FY24 as cash optimisation strategies take effect, which include the significant interest cost savings that will be achieved from lowering its corporate debt.
MONEYME is also on track with its warehouse program to complete a term securitisation transaction for SocietyOne loans in Q4.
In January, MONEYME launched its app-based credit score product after a successful trial period.
As of 31 March, the MONEYME Credit Score product had attracted over 60,000 customers.
While most credit score products out there are web-based, MONEYME’s Credit Score is app-based, allowing consumers to check their score from the palm of their hand.
The app leverages credit file data from Experian, and was built on MONEYME’s proprietary technology platform, Horizon.
The service allows users to check their credit score, view what’s on their credit file, track how their score is changing over time, and understand their likelihood to be approved for credit products.
At the end of the quarter, MONEYME began migrating SocietyOne Credit Score customers to the MONEYME app, which the company says is expected to increase customer engagement and cross-sell opportunities.
During the quarter, MONEYME also launched further automation of Autopay for brokers, while the pilot of the Autoscan feature is showing positive results and was expanded to additional dealerships.
The new product feature promises to deliver a hassle-free experience to customers seeking auto financing, providing them with a streamlined and intuitive way to view their financing options. Autoscan enables customers to access loan and repayment details for vehicles on the showroom floor, simply by scanning the registration plate of any vehicle on display.
The continued roll-out of innovative features is bolstering MONEYME’s tech-driven edge in the automotive finance sector, where fintech platforms can generate high rates of growth as banks step back from customer-facing operations into wholesale funding positions.
MONEYME has said it intends to pursue the significant opportunity from banks exiting the space to gain further market share in the sector.
In the quarter, MONEYME launched its Reflect Reconciliation Action Plan, which has been endorsed by Reconciliation Australia – establishing MONEYME’s role in reconciliation and improving its engagement with Aboriginal and Torres Strait Islander peoples and communities.
In addition, MONEYME completed its inaugural Gender Pay Gap analysis, and achieved 100% renewable energy in its Sydney HQ as part of its commitment to sustainable practices.
“We remain committed to prioritising environmental, social and governance best practice standards,” said Howes.
“I’m proud of our recent achievements in recognising Aboriginal and Torres Strait Islander peoples and communities, gender pay analysis and reaching 100% renewable energy for our Sydney Head Office.”
The formal verification process of MONEYME’s B Corp Certification application also continued in Q3, and is expected to complete before the end of calendar year 2023.
MONEYME has aligned its ESG efforts to the B Corp framework since the beginning of FY22.
The B Corp application marks an important milestone and while the company awaits certification, MONEYME calculates its B Impact Assessment score as 93.2 at 31 December 2022, well above the minimum 80-point threshold.
This article was developed in collaboration with MONEYME, 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.