Novatti’s shares soar after fresh record H1
Novatti is continuing to build on its payments strength, with a slew of record-breaking half-year results across key metrics
Investors have reacted to multi-channel payments company Novatti (ASX:NOV) record-breaking H1 FY22 results as the company delivers on its growth strategy.
Novatti delivered 51% year-on-year growth in first half sales, setting a record for sales revenue of well over $11 million.
Total revenue for H1 FY22 was $12.3m, also a record.
The company’s payment processing business more than doubled – growing some 113% to $9.1m.
Managing Director Peter Cook said revenue growth continues to benefit from its largely transactional bases, enabling it to easily scale up.
“We expect this scaling to continue as all our businesses, but particularly processing, increasingly leverage our now global operating base including Asia, North America, Europe, the UK and of course Australia, “ Cook said.
The company strengthened its balance sheet with net assets up nearly 370% on the prior half. At the end of H1 FY22, Novatti’s cash balance was $12.9 m.
Receipts from customers also increased substantially over the first half, up 63% year-on-year to $25m.
Overall growth in Novatti’s business contributed to direct costs increasing from $1.9m in H1 FY21 to $4.9m for H1 FY22.
“It is worth putting this growth in perspective – our first half sales revenue is now greater than Novatti’s total sales revenue for FY20, just 18 months ago, highlighting the strong growth journey we are on,” Cook said.
Novatti entered the new financial year with a growth strategy focused on entering new markets and expanding existing markets, pursuing acquisitions, and capitalising on its acquisition in accounting software provider Reckon Ltd (ASX:RKN).
“Our 19.9% strategic stake in Reckon Limited has already delivered a $676k dividend in its first six months as we also explore a broader business relationship between Novatti and Reckon,” Cook said.
“As a first step, we are well progressed in the launch of an integrated payments solution that would seek to add value to Reckon’s 114k+ cloud-based users.”
During H1 FY22 Novatti also announced the acquisition of 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.
Following the successful takeover of ATX, Novatti continues to assess several other opportunities as part of its pipeline of potential acquisitions.
“Across the half we continued to invest heavily in our ecosystem and in expanding our operations globally,” Cook said.
“We see the strength of our ecosystem, including our technology, licences, partnerships and team, as being central to our continued growth as it is increasingly leveraged globally to scale our revenue base.”
Novatti’s expansion with global blockchain and crypto solutions provider Ripple was expanded into Thailand. It is now generating revenue in both Thailand and the Philippines.
Discussions are ongoing between the two companies to launch in further markets across Southeast Asia.
Novatti is also making progress in expanding its EU operations, having launched new payment services in Verv.
The company has also applied for an E-Money licence, enabling Novatti to issue a range of financial products in the EU.
Across the calendar year 2021, Novatti increased its team by more than 70% to 150, with a particular focus on hiring new talent in sales, business development, and operations.
“This investment is invaluable to Novatti’s future growth, particularly as we scale our newer businesses, such as acquiring, which is gaining momentum and creating long-term, reliable revenues for Novatti,” Cook said.
Growth potential of its acquiring businesses was further strengthened during H1 FY22 with Novatti acquiring licences from both Visa and Mastercard.”
Novatti is increasingly positive about a near-term decision on its bank licence application as it works closely with Australia’s banking regulator.
As the company works to fulfil its ambitions to enter Australia’s banking market, $10.5m Series A funding has been committed, subject to regulatory approval by June 30, 2022.
“Importantly, we are increasingly positive about a near-term decision on the bank licence as we work closely with Australia’s banking regulator,” Cook said.
Novatti completed a $40m plus capital raising during H1 FY22 to further propel its growth plans.
The capital raise included the issuing of 73,180,015 Novatti fully paid ordinary shares under a placement to highly regarded institutional investors and a share purchase plan offer to existing shareholders.
In December, Novatti appointed chartered accountant Abigail Cheadle as non-executive director and chair of its audit and risk committee.
Cheadle has more than 30 years’ experience working across Asia, Europe, the Middle East and Australia.
She has led professional services practices for several leading firms including EY, Deloitte and KordaMentha with a focus on corporate strategy and risk management.
Cheadle also has 17 years working in Asia, a key growth region for Novatti. While advising the Indonesian-listed consumer finance company BFI Finance Indonesia, its market capitalisation grew 10-fold.
Cook said after a record H1 FY22, Novatti had moved into the second half with great momentum.
“Novatti is in an exciting phase of transitioning from development to monetisation, particularly as our transactional revenue streams begin to leverage our now global operating base to scale,” he said.
“We are very excited about Novatti’s future growth and remain absolutely focused on delivering on our growth strategy to get us there.”
Shares in Novatti this morning rose 4.25% to 0.25 cents.
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.