Few companies have been as well positioned for the digital transformation accelerated by a global pandemic than digital payments company Novatti Group (ASX: NOV) which has capped off a monumental year of fintech deals with record payment processing revenues.
Generating $4.9 million in sales revenue for the quarter ended 30 June 2021, Novatti also set its 9th consecutive quarter of record processing sales revenue. The figure took their FY21 sales to $16.4 million which was also an annual record, substantially eclipsing the FY20 number by 49% when reporting $11m.
Key to Novatti’s rise from fintech minnow to be a digital payments partner of Afterpay, Apple, Google and more is their underlying technology that enables businesses to pay and be paid quickly. This has been of greater demand amongst business customers in the wake of a global pandemic where Novatti’s services have been integral to many businesses transitioning their businesses purely towards digital payments and online operations.
“Novatti has now grown its annual sales revenue by an average of 45% each year for the past three years, highlighting our ability to deliver consistent, long-term results,” said Novatti Managing Director, Peter Cook.
“After spending the past years developing Novatti’s ecosystem, the shift to monetising this ecosystem continues to accelerate. In the March quarter we saw this through new fintech players like Lifepay and LITT seeking to leverage this ecosystem. Fast-forward to the June quarter, and this leaped forward with leading fintech Afterpay choosing Novatti as its partner in New Zealand.”
“This partnership with Afterpay highlighted that once regulatory approval to operate in a particular jurisdiction is obtained, Novatti is able to rapidly monetise this investment. This is a model that we believe we can replicate in other jurisdictions, unlocking new addressable markets.”
Novatti’s licence to issue Visa cards has enabled the fintech company to provide innovative payment solutions which form the underlying technology behind their payment solutions. These card issuing programs in particular have propelled Novatti to the forefront of institutional investors.
One recent payments solution is their innovative partnership with CryptoSpend that will allow individuals to pay for everyday transactions with cryptocurrency while the merchant receives fiat.
Keen for a slice of the momentum Novatti is gathering, fund managers backed the fintech company last month via an Institutional Placement to raise $40m at an Offer Price of $0.55 per share. Although there has been some selling since, retail investors have jumped into the stock by taking advantage of the discount available on NOV shares over the past fortnight.
This has resulted in 36.8 million NOV shares changing hands in July to date, representing a 72% increase on trading in June and 104% increase from May.
Savvy investors increasing their exposure to Novatti will likely have cottoned on to the Company’s growth initiatives which its capital will be applied to. Prior to their $40m raise, the last time Novatti came to the market for funds, they applied the $10m raised to new technology, new products and new partnerships.
It ultimately led to NOV shares rising by more than 100% in value from $0.25 for the fast-growing fintech to outperform the wider market which grew at just 26% over the same period.
With a banking licence expected to be granted in the coming months for the launch of their neobank, there is plenty happening at Novatti with consistent flow of new digital payment products. Further raising eyebrows has been Novatti’s 19.9% stake in accounting software Reckon (ASX: RKN) which boasts more than 100,000 small business customers.
As more light is shed on that potential partnership in the coming months, there looks to be opportunities for Novatti to rapidly grow the amount of businesses they enable to pay and be paid quickly.
*Owners of this website are shareholders in a company mentioned in this article and have been engaged by them to assist in investor communications
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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