Plenti’s solid results for FY21 have put the company on track towards its stated goal of becoming the “best lender in Australia”.

After a big year in FY20, consumer finance platform Plenti Group (ASX:PLT) has brought its strong form into FY21.

For the full 2021 financial year, the company reported a 64 per cent increase in originations to $470m, with its loan portfolio ballooning by 61 per cent to $615m.

On the back of that, revenues increased by 28 per cent to $53.1m.

The company has also booked consistent growth across each of its three main verticals – automotive lending, renewable energy, and personal loans.

While those top line figures are impressive, Plenti still has a huge addressable market to grow into across all of its lending verticals.

In the automotive lending market for example, Plenti’s loan originations have grown by over 300 per cent in the last three years to $230.8m – yet it only commands less than 1 per cent of the market.

Speaking exclusively with Stockhead, Plenti CEO Daniel Foggo says that after strong performances in the last few years in automotive lending,  the stage is now set for Plenti to really grab the market.

“We’ve still got a very long runway in front of us, given our market share remains very small when you think about the fact that automotive lending generates over $30 billion annually,” Foggo explained.

“The amount outstanding in auto loans is much larger than the credit card market. It’s just been dominated by a relatively small number of players, but we’re creating that opportunity for ourselves now,” he added.



Gaining market share

Apart from automotive lending, Plenti also gained market share in its two other segments – renewable energy and personal lending.

The company’s renewable energy loans have more than doubled in the last three years, and rose by 33 per cent in the past year alone to $57m.

In March, Plenti launched its buy-now-pay-later (BNPL) finance option for the installation of residential renewable energy products such as solar panel and batteries.

The BNPL option allows home-owners to repay their installations over 72 interest-free monthly payments.

Asked if the BNPL offering will be expanded to retail purchases, Foggo said he wants to focus on the higher value, $2,000+ market.

“The sub-$2000 BNPL market is not an area we’ll go into as a business.”

“The average amount funded in the renewable energy market is about $9,000, which creates a barrier to entry and more defensible margins over time. We like being in regulated markets,” Foggo added.

The personal lending segment, which is targeted for a diverse range of loan purposes, has also doubled in the past year to $125m.

But what’s different about Plenti, and why can’t borrowers just go to the bank?

Foggo explained that times have changed and people have smartened up, and they’re always looking for the best deals when it comes to getting loans.

Nowadays, borrowers also look at customer experience as a deal breaker, and that’s where Plenti has an advantage, Foggo said.

In addition, building a good network of brokers and getting the right funding in place are a big part of the equation.

In FY21, Plenti was able to reduce its average funding cost on new loan originations by  around 190 basis points.

“We started our funding warehouse facilities in around February March last year, so that really gave us an ability to scale up rapidly over the past year,” Foggo explained.


Tech advantage

In a market where banks are moving towards funding-based roles while tech platforms build innovative ways to scale, Foggo highlighted Plenti’s proprietary IP advantage.

He explained that Plenti’s technology is one of the biggest drivers of the massive growth it has seen in the last few years.

“It’s taken us a number of years to be in a position we are now, and we’ve invested a lot in building the right technology capabilities,” he said.

Foggo also said its technology capabilities have a direct impact on customer experiences.

Plenti has received more 5-star reviews and awards than any other consumer lender, from reputable rating companies such as Canstar and the Fintech Business Award.

“Owning our own technology also allows us to have real operational leverage in our business,” Foggo said.

“As we grow our lending originations, that starts to feed through to profitability because your cost base is not growing in the same proportion due to the technology already in place.”


Looking forward

Plenti says that its goal over the next year is to achieve positive monthly cash flow, which will put the company on the path to profitability.

But Foggo says the company does not need to do anything drastic to achieve this, and instead just needs to keep delivering the same metrics and growth it’s been doing every quarter.

He expects positive cash flow to come in the next 12 months. As a measure of Plenti’s operating strength, the metric is expected to be achieved while the company also invests heavily in its technology and growth.

For potential investors, Foggo says there are plenty of attractive qualities about Plenti.

For one, the company has a diverse way of attracting customers, from digital channels to brokers, and now its renewable energy BNPL platform.

He also believes the diversity of funding platforms it can lean on make it a more resilient business.

Foggo stated that his mission is to make Plenti the best lender in Australia.

“We do anticipate this financial year to reach a billion-dollar loan book, and I think that’s characteristic of us, leading the pack if you like,” he said.


This article was developed in collaboration with Plenti, 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.