Novatti Group Limited (ASX: NOV) is an ASX listed software technology company, which helps to provide customers with digital financial solutions like digital wallets, mobile money, branchless banking etc. Some of the company’s services are Vasco Pay - a prepaid reloadable Visa card, Chinapayments.com-bill payment services, Flexewallet- remittance and compliance service etc.
On 30th April 2019, the company announced its quarterly update for the period ended on 31 March 2019.
APRA banking licence
The company had lodged an application to APRA for a banking licence in November 2018, to focus on offering new banking services to Australian customers. APRA has reviewed the company’s bank licence application, with several regular engagements with it. Side by side, the company is also expanding its banking services team, in preparation for its launch while anticipating the application to be successful.
The company’s revenue grew to $2 million for the first time, compared to the past revenue outcome. The transactional revenue was flat from the previous quarter, and the company views this as a long-term trend due to the reduced spending by consumers post-Christmas.
New transaction processing agreements
The company entered into agreements with 14 processing partners, which is expected to drive additional transaction processing growth in the due course. This includes agreements with:
- Multiple Australian and offshore financial services institutions for remittance compliance and processing services.
- SendFX for remittance and cross-border payments network.
- ePay Australia for the provision of Wechat Pay processing on ChinaPayments.com.
IBM World Wire Agreement & Stellar
The company has also signed to join IBM's new cross border payments network, World Wire. With SendFx platform being integrated with World Wire, the company will use the network as one of the alternatives for routing transactions. It is also testing Australian dollar stablecoin (announced earlier) on World Wire.
The company aims to maintain the benchmark of signing 8 - 12 agreements per quarter, which would help it to attain growth in the transaction volume and related fees.
It also expects to continuously engage with APRA, as it is reviewing the company’s bank licence application. In order to continue its strong revenue growth, it will continue to assess synergistic acquisitions.
The company used a total of A$1.32 million for the operating activities, the highest expense being incurred on payments for product manufacturing and operating costs, which led to the cash outflow of A$3.25 million. Other major expenses were incurred on staff costs (A$1.77 million), administration and corporate costs (A$708,000). The cash receipts from customers stood at A$4.95 million.
During the quarter, the company used net cash of A$571,000 for investing activities, including A$556,000 of investments in Intangibles licenses. Financing activities had led towards a total cash inflow of A$1.84 million, out of which A$1.97 million was received from the issue of shares, and A$132,000 had been paid towards transaction costs related to issues of shares. At the end of the quarter, the company had net cash of A$2.66 million in the balance sheet.
The company also estimated the future cash outflow for the next quarter which stood at A$6.81 million. It has made an estimate of the staff cost, for increasing it to A$1.93 million from the current quarter staff cost of A$1.77 million.
Recently, the company had announced “Buy Now Pay Later” SAAS agreement.
The market capitalisation of the company is A$35.88 million. The 52-week high and low of the stock is A$0.31 and A$0.15 respectively. The stock of the company, last traded at A$0.22, up by 2.326% from the previous closing of A$0.215, as on 30th April 2019. In the last six months, the stock has delivered a return of 2.38%, and the YTD return stands at 19.44%.
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