Recurring revenue keeps climbing as new clients join Change Financial
Link copied to
Change Financial has had a very productive Q3 as its recurring revenue base continues to grow.
Fintech payments leader, Change Financial (ASX:CCA), continues to make rapid progress as it released key updates to investors this morning.
For the quarter ending March, CCA notched US$2.9m of receipts from customers, with revenue totalling US$2.1m.
Importantly, its annual recurring revenue (ARR) increased to US$4.9m, an upward trend the company has managed to deliver since Q2 of FY21.
CCA also continues to gain traction in customer acquisitions, with 21 sales opportunities from new and existing clients won during the quarter.
In the US, the company has just secured two new Payments as a Service (PaaS) clients with combined total minimum fee commitments of US$2m over initial terms.
“We continue to make excellent progress on executing our strategic plan during the quarter,” commented Change CEO, Alastair Wilkie.
“We’re also seeing increased interest from new and existing clients for both our Vertexon and PaySim product offerings in the US, Oceania and LATAM as we continue to deliver on our product roadmaps and sales pipeline.”
Despite the scaleup strategy, Change has managed to increase its cash position to US$1.9m, as at 31 March.
During the quarter, Change announced that it would launch direct issuing services for Mastercards in Australia and New Zealand.
Under the 6-year agreement, Change will be able to issue prepaid and debit cards under the Mastercard logo, where it is set to receive an upfront cash incentive of US$1m from Mastercard.
“We announced our direct issuing strategy for Australia and New Zealand, and successfully achieved two major milestones to bring this to life,” explained Wilkie.
“Firstly, we strengthened our relationship with Mastercard through entering an exclusive six-year partnership for direct issuing in Australia and New Zealand.
“This partnership is expected to deliver transactional and recurring revenues, while providing incentive discounts which reduce Change’s network costs.”
The collaboration with Mastercard will also provide opportunities for Change to enhance its PaaS offering, Vertexon, as well as opportunities to collaborate across data and technology.
“Additionally, we received regulatory approval in New Zealand to be a registered Financial Service Provider. This registration, combined with our partnership with Mastercard, will enable Change to issue debit and prepaid cards in New Zealand,” said Wilkie.
“Excitingly, we are already seeing strong interest in our offering in New Zealand.”
Change is also anticipating an approval for the Australian Financial Services Licence in H1 FY23.
In the US, Change has completed the integration with Axiom Bank to support a similar Mastercard prepaid card issuing program. This integration was a key quarterly milestone, which solidified the partnership with Axiom for US issuing and card programs.
Earlier this week, Change secured two more US fintech clients as new PaaS clients hosted on its Vertexon platform.
Under the deal, the clients will be able to leverage the Vertexon platform to offer physical and digital cards and payments to their customer bases.
Only launched in October last year, Vertexon is Change’s PaaS offering which provides quick-to-market card and payments solutions to global banks and fintechs.
Both contracts contained upfront fees, as well as ongoing monthly minimum fee commitments with additional revenue expected from interchange and transactions. The combined minimum value of the contracts over the initial terms is US$2m.
Meanwhile, following the successful completion of beta testing, the PaySim Application Programming Interface (APIs) was released to the market during the quarter.
PaySim is Change’s SaaS-based automated payment testing solution that allows banks and fintechs to accelerate their development and product release cycles.
ANZ Bank became the first client to licence the new PaySim API, and there is already strong demand for the API from other existing and new clients.
This article was developed in collaboration with Change Financial, 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.