Special Report: Following another strong quarterly update, NOV is positioned to leverage its unique competitive advantage in the global payments landscape.

Fintech payments company Novatti (ASX:NOV) is coming into 2021 with strong momentum, after a record revenue result in the December quarter.

The company booked quarterly sales revenues of $3.79m, a gain of 52 per cent from Q4 2019, and finished the year with $9m cash in the bank.

Speaking with Stockhead about the result, Novatti CEO Peter Cook said that with its robust cash balance, the company is positioned to further accelerate its investment in business development as it scales up.

This includes US expansion of its SaaS-based payments subsidiary, Emersion, which is scheduled for the March quarter.

With a client base spanning around 60 countries and ~$2.3bn of transactions processed annually, Cook said Novatti’s results highlighted its ability to deliver sustainable long-term growth.

“We’ve got serious revenues and cash in hand. We’re consistently growing by around 50 per cent a year. We think at some point the market will click onto that,” Cook said.

“Ultimately payments is a scale game, with the long term winners being those that manage to process more transactions and then create greater margins through technology and commercial agreements.”

And Cook said Novatti now has an opportunity to capitalise on its existing platform.

“Most of our business at the moment is B2B, with well over 100 fintech and banking clients already providing a platform of consistent revenue,” he said.

“In addition to securing new clients, we will leverage our existing network to offer value-add services, broadening our revenue base and increasing margins.”

Global partnerships

While Novatti’s client numbers and payments revenue continue to climb, Cook highlighted that those results are the by-product of some competitive advantages unique to the company.

In other words, companies in the space need more than just those industry tailwinds to succeed.

For example, Novatti’s partnerships with global tech giants means its prepaid Visa card offering is now available on major platforms including Google Pay, Apple Pay and Samsung Pay.

And those partnerships are only available because Novatti has already obtained and utilised its Australian Financial Services Licence (AFSL) in the domestic market.

Cook added that the number of financial services companies in Australia that have approval to issue cards with global payments platforms is a very small group that includes the major banks, putting Novatti into a very special niche.

More broadly, the company’s M&A strategy gives it an opportunity to drive sales with a multi-channel approach, leveraging Emersion’s SaaS platform for billing and invoicing.

“Since acquiring that business, we’ve lifted it from acquiring 1-2 clients a month to around 5 clients a month. Our aim is to accelerate towards 8-10 new clients a month,” Cook said.

“We’ve really been able to increase its growth rate by applying capital and our experienced team – we’ve more than doubled that growth rate and we’ve got an opportunity for more rapid growth by taking it into the US market.”

In summary, the company has laid the groundwork for a big year in 2021, with regulatory clearances and key partnerships already in place.

“For us it’s about leveraging our existing platforms and regulatory licences to do deals with tier one global payments companies,” Cook said.

“We expect this will not only result in further monetisation of our platforms, but also show that these global partnerships can rapidly scale our platforms too.”

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.