Novatti Group (ASX:NOV) Dec '20 quarterly update


by Rachael Jones

Novatti Group Limited (ASX:NOV) CEO Peter Cook provides an update on the company's record December quarter results, progress with strategic partners and overseas expansion plans.

Rachael Jones: Hello. I'm Rachael Jones for the Finance News Network. Joining from Novatti Group (ASX:NOV) is CEO Peter Cook. Peter, welcome back to the network.

Peter Cook: Good morning, Rachael.

Rachael Jones: Now, Novatti Group is a digital banking and payments company. Can you tell me what is your niche?

Peter Cook: Rachael, we are building the full infrastructure, whether it be technology, people, commercial agreements, licences to enable payments, digital payments, anywhere on any device. For instance, if you use a prepaid Visa card, pay for a coffee down at a coffee shop, we could be issuing the Visa card, we could be taking the payment and processing it, settling to the merchant. So, those services that people expect in a fully digital payments world.

Rachael Jones: Thanks, Peter. Now, let's talk about your December quarter. What were the highlights?

Peter Cook: Rachael, another really strong quarter. Record sales revenue, $3.7 million, and year on year, that was up about 50 per cent. Our total revenue was a bit over $8 million, so a run rate of well over $16 million now. That $8 million was actually up 60 per cent against the prior calendar period.

So, what we're seeing is that we're monetising a lot of the work, the platforms and infrastructure that we've put in over the last few years, and getting very strong growth. So, actually, we've been averaging top-line revenue growth of about 50 per cent per annum for the last four years.

Rachael Jones: Excellent. And can you tell me about the operations over the quarter?

Peter Cook: So, operations, very, very strong addition to our capability during the quarter. We announced agreements with Google Pay and Samsung Pay so that we can put their virtual services inside our clients' wallets. Just after the quarter, we've announced Apple Pay for a similar thing. During the quarter, again, Ripple Pay, a number of other major global partnerships. Actually on top of that, an additional licence in New Zealand, where we have the right to issue product in New Zealand.

So, what we see is that we're continuing to extend our business. We’ve brought in additional management, some of those partnerships, additional licences, so really laying out a massive platform or infrastructure for us to build revenues on top of. And we're seeing those revenues come through with that record quarter.

Rachael Jones: And what can you tell me about the outlook?

Peter Cook: Outlook, very strong. In fact, just again in January, we've announced that we've been awarded an associate issuing licence by Visa for New Zealand. So again, continuing to extend our licences. And I think that what the investors will see is a number of deals or pieces of work where we're absolutely monetising and leveraging the infrastructure, the licences, the networks that we've got, and in fact our commercial partnerships, as we continue to strive for consistent sustainable growth.

So, 50 per cent growth per annum for the last four years, we're absolutely focused on continuing that. And, in fact, we've got a very strong balance sheet, circa $9 million, of available cash, with which we're trying to further drive that growth.

Rachael Jones: And, Peter, can you tell us about your overseas expansion plans?

Peter Cook: Yes, Rachael. So, we announced in the fourth quarter of last calendar year that we would take our immersion billing platform to the US. Now, we've got a very strong growing base of business for immersion in Australia and New Zealand, but we think we can really drive growth and actually the capital value of that part of the business by bringing in a similar client base in the US.

So, the last few months we've extended some of our software, for instance, working with the US sales tax and postcode system, got ourselves ready to expand in the US, and we'll largely do it off some of the marketplace agreements we've got, such as Oracle Zero, a company called ConnectWise and hopefully shortly QuickBooks. So, essentially a platform-led play, where, from the marketplaces, businesses can take the immersion service and grow.

We've also announced with Ripple that we'll extend our services very strongly into Southeast Asia, and again, leveraging that international partnership. And I think post the quarter, the extension of our Visa issuing licence in New Zealand, we'll see a significant growth there.

Rachael Jones: And to the last question now, Peter. Is there anything else you'd like to add?

Peter Cook: Well, I hope that investors will really see that we are building a very sustainable long-term growth business. We're in the right thematic, digital transformation in the financial services sector. We've all seen the growth of payments through COVID. We've been able to grow our business at 50 per cent per annum ongoing, we're doing a lot of work to really continue that, and in fact enhance that growth, building on a lot of the expenditure and capital base over the last few years.

And then, finally, many of the investors will know about the work we've done in the banking space. We're ready, willing, and able to get a bank licence, which will really allow us to have future security of our underlying payments business and extend the margins and capabilities of our overall business.

Rachael Jones: Peter Cook, thanks so much for the update today, and I'll look forward to catching up with you for your half-year results.

Peter Cook: Rachael and Fin News Network, thank you very much.