Rapid revenue growth saw Novatti breaking the $5m mark, capping off a productive quarter where expansion was the main theme.

Multi-channel payments company Novatti (ASX:NOV) has broken through the $5m quarterly revenue mark, as it delivered yet another record result.

Earnings report released this morning shows that September quarter revenue was up by 49% YoY to $5.3m.


The company’s core payment processing business continues to deliver, contributing $4.2m to the total revenue and represents a massive 103% growth YoY and a 10th straight quarter of record sales revenue.

Novatti is also still well-funded with a $19.9m of cash in the bank at quarter end, following a marquee $40m capital raising in July to fund its global rollout strategy and a strategic stake in accounting software provider, Reckon Ltd (ASX:RKN).

“The September quarter saw Novatti take another leap forward on its growth journey,” says Novatti CEO, Peter Cook.

“Our existing business operations continue to generate strong growth, with quarterly sales revenue of $5.3m, up 49% year-on-year and breaking through the $5m mark for the first time.”

It wasn’t just about the numbers. Expansion was also high on the agenda during the quarter, with traction being made in Southeast Asia through a partnership deal in Thailand and an acquisition in Malaysia.

“We expanded our partnership with Ripple into Thailand, having launched in the Philippines earlier in the year,” Cook explained.

“We also announced the agreement to acquire leading South East Asian fintech, ATX, creating a platform for further expansion in the region.”


Global expansion

During the quarter, Novatti successfully executed on its growth strategy, as it expands across its key targeted market of southeast Asia.

The company acquired Malaysian fintech ATX, in a deal worth up to $9.9 million.

ATX provides traditional retail stores and kiosks with digital payment services, such as third-party bill and product payments, and is considered a pivotal acquisition for Novatti.

Both companies have been partners since 2015, which has resulted in a strong understanding of the business, and reducing risk associated with the acquisition.

Through this deal, Novatti will be in the position to introduce its additional services, such as billing, along with the potential to further provide other value-added products into ATX’s customer base.

Novatti also secured its expansion into Thailand by partnering with global blockchain and crypto solution provider, Ripple.

The partnership leverages the top 10 global cryptocurrency, XRP, to process cross border payments instantly, and highlights Novatti’s exposure to the broader growth in the use of cryptocurrency globally.

“The completion of Novatti’s $40m plus capital raising during the September quarter has enabled the launch of a new, expanded growth strategy, which we are now delivering on,” Cook said.

“We have also expanded our presence in the EU market, with the launch of Verv, providing new payment services.”

To cap out the highly successful quarter, Novatti also went live with its new payment acquiring business with revenue already being generated, while also commencing the integration testing for its Visa and Mastercard acquiring licenses.

Novatti holds an Australian Financial Services Licence (AFSL) in the domestic market, and was recently selected by payments leaders Afterpay (ASX:APT) to collaborate on a prepaid Visa program in New Zealand.

The company has also begun discussions with Reckon on servicing the needs of their customers following NOV’s 19.9% strategic acquisition stake.

Reckon provides a good opportunity for Novatti, as it has an annual revenue of more than $75 million, EBITDA of more than $32 million, and a rapidly growing pool of more than 100,000, cloud-based customers.


Looking ahead

Novatti is looking to maintain its strong momentum in FY22 by capitalising on the acquisitions and partnerships it has made in the last quarter to generate fresh revenues.

The Ripple partnership in Thailand is an example of how Novatti’s ecosystem can be leveraged to enter new markets to generate revenue, a model Novatti says it will continue to replicate going forward.

An application for an E-Money licence in Europe has been submitted, which would enable Novatti to issue a range of financial products in the EU following its recently launched new payment services, Verv.

It’s also focusing on further strengthening its capabilities by securing full acquiring licences from both Visa and Mastercard, with integration testing currently under way.

Back home, Novatti is working with Australia’s banking regulator to finalise its restricted banking licence.

A $10.5m Series A commitment for its banking business was secured in September, provided regulatory approval is obtained before the end of February 2022.

The company says it will continue to assess several opportunities as part of its pipeline of potential acquisitions.

“It’s been an incredibly busy quarter but we remain absolutely focused on fulfilling our growth strategy going forward to deliver long-term growth for our shareholders.”

This article was developed in collaboration with Novatti, 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.