MoneyMe hits ‘inflection point’ for growth after another massive quarter
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The company’s latest results are indicative of big profit growth in the years ahead.
Fintech platform MoneyMe (ASX:MME) has been steadily laying the groundwork for growth amid structural shifts in Australia’s consumer finance sector.
And its latest quarterly results this morning reflect a company that has put all the pieces in place for huge profit growth in the year ahead.
Loan originations more than doubled from the prior-year quarter to $108m, which flowed through to Q3 revenues of $15m – a strong quarterly increase of 22 per cent from December.
The average receivables term also increased to 35 months (from 32 months), extending MME’s profit runway at the same time as funding costs fell sharply.
MoneyMe’s wholesale funding costs fell to just six per cent, a material drop from 9pc in the December half-year.
And the combination of a rapidly increasing loan book on top of a lower cost base is what CEO Clayton Howes described at the ‘inflection point’ in MME’s growth story.
Speaking with Stockhead about the result, Howes highlighted that the latest data points are proof of execution across all of MME’s key metrics – loan growth, funding costs and new products.
“As we grow, our funding costs come down as a percentage of our loan book, and that process is accelerating,” Howes said.
“So what we’re seeing now is the true essence of what the management team said this business could be.”
Those income metrics are supported by the quality of MME’s tech offering, which is driving “automation and efficiency through innovation, with new lending products that are really resonating in the market”, Howes said.
MME’s latest growth surge is also more proof that the company is building a share in what is a huge addressable market, as Australia’s major banks move back from consumer finance and being replaced by dedicated fintech platforms.
“That structural shift away from banks is real. These (quarterly) numbers are big and each quarter they continue to grow faster,” Howes said.
In that context, every new quarter of strong growth in loan originations creates a positive feedback loop for lower funding costs.
And as investors look ahead, market updates like today’s Q3 result clearly illustrate that the company is positioned to convert its top line loan growth into huge profits over the coming years.
Unlike high-touch sectors such as BNPL, MoneyMe’s loan structure means each customer generates ongoing revenues over a term of almost three years (35 months).
At the same time, the company is leveraging data insights to improve the credit quality of its customer-base, which reported an above-average Equifax score of 644 for the March quarter.
Looking ahead, all those trends are poised to accelerate into the 2022 financial year.
Markets can expect “a lot more records to be broken, both in terms of loan originations and increasing diversification across our product set”, Howes said.
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.