𝛼SKSpenda Limited - Q4 Result and $50m Debt Warehouse Announced
Spenda Limited
Q4 result and $50m debt warehouse announced
Spenda Limited (ASX:SPX) has a long history in business financial services software development. The Spenda platform, launched in February 2020, has developed to become an integrated applications, payments and lending platform. SPX is reporting a large pipeline of customer leads for the software and services delivered through Spenda as Australia opens post-COVID lockdowns. Businesses are looking to simplify processes and payments systems, with Spenda offering a competitive platform integrated with major accounting and payments providers. SPX launched the full payment applications suite on Spenda in May 2021. The company is now launching a range of non-bank lending offers currently funded via equity prior to the imminent announcement of a debt warehouse to fund expansion in business lending products aimed at transactions facilitation. SPX provides a platform that simplifies end-to-end transactions for businesses and provides transparency to allow secure lending offers to expand. In H1 FY22 Spenda recorded initial income from lending of $0.36m prior to establishing a debt warehouse. The company’s focus is on commercialising the Spenda product suite, concentrating on signed customer agreements already in the pipeline and establishing a debt warehouse to accelerate lending via the platform.
Business model
Spenda Limited operates a Software-as-a-Service (SaaS) model for licensing of the components of the Spenda platform. Businesses have several ways to take up the service with the ability to choose which modules will be turned on – point of sale, inventory management, e-commerce, procurement and service management. Payments services are then available for wholesale and retail B2B and B2C use. Utilising the ledger-to-ledger dataset provided by these transactions, SPX can securely offer on-demand lending, pay later, early settlement discounts and trade finance to its business customers to enable further revenues growth. Visa’s BPSP (Business Payments Solutions Provider) and Mastercard’s BPA (Business Payment Aggregator) agreements upgrade the company’s ability to acquire customers and improve margins.
Q4 progress and debt warehouse
Spenda had another quarter with positive business momentum but relatively stable customer receipts, when compared to Q3 FY22. Full-year cash receipts doubled relative to FY21. Spenda delivered on last quarter’s targets – delivering new payment and lending flows to customers (5x increase in transactions) and improving Spenda’s Accounts Receivable and Payable products. Most importantly, SPX announced the establishment of a $50m debt warehouse after the end of the quarter. The facility should enable SPX to accelerate take-up of the company’s debtor financing and other lending products. In coming quarters Spenda expects to focus on realising the potential of current projects, using the debt warehouse to scale up lending programmes in target markets and accelerate onboarding of new customers.
Valuation is at an early stage with upside from results
The fintech sector is a diverse group with different niche focuses and stages of corporate development. Similar listed early-stage companies include Douugh (ASX:DOU), Earlypay (ASX:EPY) and Ioupay (ASX:IOU). Share price volatility remains high. Quarterly results continue to show the company’s progress towards the goal of delivering a robust payments and lending platform.
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