Novatti Group (ASX:NOV) June quarter FY21 update


by Melissa Darmawan

Novatti Group Limited (ASX:NOV) CEO, Peter Cook, provides an update on activities from the company's June quarter, discussing growth in platforms and infrastructure, and the recent capital raise.

Melissa Darmawan: Hi. I'm Melissa Darmawan for the Finance News Network. Joining me from Novatti Group (ASX:NOV) is CEO Peter Cook. Peter, welcome back, and nice to see you again.

Peter Cook: Hello, Melissa, and great to be back with FNN and their viewers.

Melissa Darmawan: It's good to have you. Novatti Group is in the payments business, providing a range of services for banks and tech companies. For those tuning in for the first time, can you talk us through the business and how it has evolved?

Peter Cook: Melissa, Novatti at its core proposition enables businesses to pay and be paid. We see ourselves as a multi-services payments provider, covering the complete payments ecosystem, whether it be issuing, acquiring, cross-border payments and subscription billing services. So, any device, anywhere, enabling businesses through technology to do modern digital payments. And we really do this by leveraging our ecosystem, financial services licences in Australia and overseas, technology, and commercial and global relationships with other payments companies, such as Visa, Marqeta, Alipay, WeChat Pay, etc.

Melissa Darmawan: Thanks, Peter. Now to your June quarter update. Can you tell us a bit more, starting with financials?

Peter Cook: Starting with total revenue for the year, about $18.4 million. That was up from $11.9 million the year before and up about 50 per cent. On sales revenue, we finished the year at $16.4 million, including a belter of a quarter at $4.9 million for the last quarter. Annual sales revenue up more than 50 per cent. And year on year, that quarter was up well over 60 per cent. And then, just in terms of our sales revenue, it really, across the three years, last three years, has grown at about 45 per cent per annum year on year.

On operations, we're really building out the ecosystem, but we're also really shifting to accelerate our monetisation of it. So as an example, last quarter we announced that we were providing card services for Afterpay in New Zealand, and that was really a function of getting licensed in New Zealand by both the regulator and Visa. So, we've got a model we think we can replicate and address new markets.

Melissa Darmawan: And what's your outlook?

Peter Cook: We're very much aiming to bring through the bank licence later this year. We're aiming for that November timeframe for it to be issued – but, of course, in the hands of the regulator. Acquiring licences with Visa and MasterCard -- we're aiming for the end of September. We have some actual other licences in Europe and Singapore that we're working on. In terms of other activities, mergers and acquisitions, we're very much looking at bringing through an acquisition in this half year.

Melissa Darmawan: Now to your capital raising and share purchase plan, could you tell us a bit about the raise and what this means for the Novatti?

Peter Cook: A really great raise for Novatti. $40 million in the placement to very highly regarded institutions. So, very much an institutional raise. And then there's a $5 million share purchase plan that's underway now. In terms of application of funds, about $22 million towards buying 19.9 per cent of Reckon. Reckon is a highly regarded accounting services company, about 100,000 customers, very profitable and, you know, very sticky customers. And we would hope over the short to medium term to be able to work with Reckon in evaluating opportunities to bring payments to their customers.

For the balance of the raise, some allocated to the bank licence, funding of that. Some flagged against mergers and acquisition. And, a bit like the raise we did about this time last year, some of the funds allocated towards straight growth. And again, going back to growth, which is what I think our shareholders want from us, we're really focused on it. We've got the funds to now really continue to push on. So, a transformational capital raise, but really gives us strength in the balance sheet -- and, of course, that gives you lots of agility during the next six to 12 months.

Melissa Darmawan: Last question, Peter. Is there anything else you would like to add?

Peter Cook: Well, Melissa, first of all, on the numbers, as I said, we've had a great quarter. You know, we are becoming a much bigger company and really bursting through some revenue barriers. In terms of the work we're doing, we've been able to undertake the capital raising, take a major stake in Reckon, we've got working capital to continue to drive the business. So, you know, a bit like last year, but a super exciting year in front of us. We've built up our team. We've built up some of our underlying licences. We've got the balance sheet and, hopefully, our investors or shareholders can really see that we're building a sustainable important business in the financial services and payments space.

Melissa Darmawan: Peter Cook, thanks for your time today. Congratulations on a great quarter and I look forward to your next update.

Peter Cook: Melissa and FNN, thank you very much.


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