VAT tech company Way2VAT has completed a strong half, signing up new enterprise clients like TikTok, along with introducing the world’s first Smart Spend Debit MasterCard.

Value added tax (VAT) fintech Way2VAT (ASX:W2V) has accelerated its growth trajectory in the first half of FY22 – signing up platform partners, enterprise clients and introducing the world’s first Smart Spend Debit MasterCard.

For the period, transaction volume was up 8% on the pcp to $5.43 million. Revenue however was down 25% to $0.525 million on pcp, due mainly to an increase in the ratio of accounts payable and local VAT claims which attract lower commissions.

Revenue for the half was also impacted by international VAT claims, which are still recovering from pre-COVID levels.

Way2VAT’s small to medium business (SMB) clients increased 21% from 700 to 850 during the half, both through indirect and platform partner sales.

The company also signed 15 new multinational enterprise customers including TikTok, Playmobil and Artsana Group across a diverse range of industries.

These signings have grown W2V’s enterprise client base to 215, which is an increase of 25% over the past year.

In addition, Way2VAT now has 6 platform partners after entering a partnership with Circula, the DACH region specialist and largest expense management solution provider in Germany.

One of the biggest highlights for the half was the launching of Smart Spend Debit MasterCard – the world’s first spending card automating VAT/GST returns for the SMB and Enterprise market in partnership with Railsr and Mastercard.

On the balance sheet side, W2V is well funded, with a cash balance of $1.461 million as at 30 June.

This comes after the $1.090 million cap raise through an oversubscribed share placement that gained strong support from institutional and cornerstone investors.

Way2VAT has also received a funding grant of $625k from the Israeli Innovation Authority (IIA).

This grant is aimed at supporting the R&D and initial marketing and commercialisation of the Smart Spend Debit MasterCard.

W2V CEO, Amos Simantov, expects to see a steady return to solid revenue growth during the second half of 2022 and throughout 2023, as foreign travel returns to more normal levels, with its higher commission rates.

 

Smart Spend Debit MasterCard launched

Partnering with Railsbank (now Railsr), Way2VAT launched the Smart Spend Debit MasterCard in April this year.

It’s the world’s first spend card for the SMB and enterprise market that fully automates VAT/GST returns from end-to-end.

Demand for debit card use is growing globally. In Europe last year, cards with a debt feature increased by 42.7 million to 813.5 million. Around seven in 10 cards issued in Europe now carry a debt function, because consumers like the flexibility and ease of debit payment.

Way2VAT’s Smart Spend Card also allows companies to submit spend receipts and capture invoices through its proprietary technology platform.

The new technology captures the receipt and processes it all the way through to payment, and can automatically analyse, reconcile, sort and submit documentation to foreign tax authorities.

Using the Card, employees can simply spend their allocated amounts and the VAT/GST will be automatically submitted with all the relevant administration completed.

“The launch and initial rollout of our world-first Smart Spend Debit MasterCard, built to meet customer demand for a card of this kind for the SMB and enterprise market, fully automates VAT/GST returns from end-to-end, will drive strong sales in its own right and allows us to upsell to our existing SMB and enterprise clients,” said Simantov.

Through the Card, Way2VAT will earn revenue through a Software-as-a-Service (SaaS) model, generating new annualised income streams for the company.

The Card is currently being rolled out to customers initially in the aviation, security, automotive and technology sectors as these industries showcase the broad range of capabilities and different uses that the Card can offer.

 

Enterprise clients and partnerships

During the past six months, Way2VAT signed new deals with major multinational enterprise clients including TikTok, the world’s leading short form video hosting service with 1.4 billion users.

TikTok will initially use Way2VAT’s platform for approximately 7,000 of its employees in Europe, UK and the Asia Pacific, with potential to expand to other markets.

Other significant clients signed during the half include Ariston Group, an Italian global leader in energy-efficient thermal products with over 7,700 employees in 42 countries.

Playmobil, Germany’s largest toy manufacturer and one of the top-30 entertainment and toy manufacturers in the world, has also signed up with Way2VAT.

In April, Way2VAT increased its key partnerships to six after entering into an agreement with Circula, the largest expense management solution provider in Germany.

The partnership deal allows Circula clients to use Way2VAT’s automated VAT claim and return solutions product for SMBs.

These partnerships and integrations with platforms such as Circula, Allocate, Elmo, Yokoy, Zoho and Xero enable Way2VAT to strengthen its presence as a leader of automated VAT recovery software for the SMB market.

In this segment, Way2VAT is generating revenue through each successful VAT reclaim transaction that those partners process on the Way2VAT platform.

 

Product development and patents

In the half period, Way2VAT has completed the integration with the Railsr platform BaaS (Bank as a Service) to support its Smart Spending Card users.

The Company has also filed several patents to further advance and protect its technology.

The first patent application was for ‘Systems and Methods for Document Image Analysis by Alignment of Document Image Sets to Spreadsheets’.

This patent application outlines a new method for automatically matching tabular expense report sheets and document image sets, eliminating the need for manual processing.

Additionally, Way2VAT also received a new patent from the US Patent and Trademark Office for its application for ‘Systems and Methods for Document Image Analysis with Cardinal Graph Convolutional Networks’.

This patent will support improvements to the technology for improved efficiency, speed and fraud detection, and further advances Way2VAT’s platform as a leader in the VAT reclaim market.

 

Outlook

Commenting on Way2VAT’s outlook, Simantov said:

“The trend for increasing transaction volume will continue as both business and personal domestic and international travel returns to more normal levels.

“Research and development remain key, with the development of new products to meet the evolving needs of our customers.

“We look forward to the launch of a new product based on our patented AIA (Automated Invoice Analysis) technology that also incorporates the latest in AI and computer vision technology.

“This will cement our position at the forefront of the accelerating trend of companies seeking to automate and digitise their tax and compliance-related processes.

“Our recent binding share sale agreement to acquire 100% of Spanish company DevoluIVA has seen us enter the Spanish market.

“This will allow us to offer complementary domestic and foreign VAT and accounts payable services, and rollout the world-first Smart Spend Debit MasterCard through an established national network and opens doors to other Latin American countries with similar VAT and accounts payable structures.”

 

This article was developed in collaboration with Way2VAT, 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.

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