Propell guns for maiden profit in 2023 as it launches a $2.8m convertible note
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Propell believes the convertible note cap raise is the missing and final piece to the company’s maiden profitability.
Aussie finance platform Propell Holdings (ASX:PHL) is gunning for profitability in FY23 following the company’s latest round of funding.
The rapidly growing company is currently undertaking a convertible note cap raise for $2.8m as it looks to take the business toward a maiden profit. This offer is being led by Reach Corporate.
The funds will be used as working capital and to further accelerate its lending book, which generated record volumes in the last quarter (Q4).
Propell believes the convertible note cap raise is the key missing piece towards its goal of achieving cash flow breakeven and profitability as early as possible, which it says could happen by the end of CY23.
The company owns one of the most popular small and medium enterprise (SME)-focused lending platforms in the country.
Since listing in April 2021, PHL’s client base has grown from 320 to over 2,150 in Q4 FY22, its sixth consecutive quarter of at least 30% quarter-on-quarter growth.
Propell’s lending platform is targeting Australia’s 2.4 million SMEs who the company says are frustrated with traditional banks’ slow and difficult lending processes and paperwork.
The platform is serving a potentially large addressable market as Australia’s small businesses account for 97% of the country’s enterprises.
Between 2014 and 2018, it was determined that poor financial management was the second-leading cause for SMEs failing in Australia.
As a result, around 38% of SMEs in the country have indicated they are actively looking for new solutions in a market comprising $423 billion in SME loans.
To support this growing need, Propell has been building on a technology that has allowed it to offer not only a leading credit decisioning engine, but also a platform that can automate and simplify the lending process.
With the tech build now largely complete, Propell is in a position to achieve its profit and cash flow targets with sufficient working capital in place from the convertible note cap raise.
The 30-month convertible note with 10% interest also gives investors the option conver to PHL shares at a discount price of between 3c and 7c depending on the 30 day VWAP at the time of conversion.
The last traded PHL price was 5.6c.
Investors could also redeem the notes instead of converting, and will receive seven bonus stock options issued upfront for each $1 of investment.
Propell is one of the few success stories in this current difficult environment.
The company’s lending volumes continue to rise in the last quarter, driven by a 40% QoQ increase in average loan size to just under $20,000.
Other metrics, like customer acquisition costs and loss rates, also keep improving enabling the company to register a record-breaking Q4.
Propell says that its platform is highly scalable as more products can be added easily, enabling it to rapidly increase revenue from here.
This clearly differentiates the company from other high-growth yet cash-burning fintechs, making Propell less reliant on capital markets.
Propell says it remains focused on becoming the go-to finance solution for small businesses, over old-fashioned banks – with the goal of reaching 100,000 clients in five years.
For more information on Propell, visit their investor portal here.
This article was developed in collaboration with Propell, 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.