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Spenda Expand Landmark Carpet Court Deal

10 July 2023 11:01
ASX: SPX

Having now completed the rollout of its payment platform across a number of Carpet Court stores, Spenda Limited (ASX: SPX) is now deepening its relationship with the retailer, signing a five-year exclusive agreement to offer lending services to stores across the newly completed network.

Rolled Out

With the completion of the rollout, a bespoke iteration of Spenda’s payment platform is now integrated across Carpet Courts’ entire franchise network which consists of approximately 205 member stores, being the largest retail floor-covering specialist in Australia.

Spenda’s platform is poised to increase productivity and create efficiency for both individual member stores and Carpet Court’s National Support Centre (‘NSC’) allowing member stores and head office to easily see their inflows and expenses, raise disputes, and better manage their cash flow.

Payments between the NSC and its stores equate to approximately $20 million per month, all of which are now processed through Spenda’s platform, with Spenda receiving revenue through this as Software as a Service (‘SaaS’) fees.

Deepening Relationship

The completion of the rollout and integration of Spenda’s platform into Carpet Court stores has allowed it to begin offering lending services across the entire Carpet Court network, with the Company entering into a five-year exclusive deal to offer working capital finance to all Carpet Courts stores.

Lending services will leverage funds from the $50 million dollar debt facility it secured in August last year, with Spenda having successfully drawn an additional $2 million from the facility just a few weeks ago.

While Spenda is currently unable to provide an accurate amount of revenue that will be generated by the new agreement, the Company estimates that potential revenue will be up to $30,000 dollars per store per annum, offering a compelling new avenue for revenue.

Under its current agreements with Carpet Court, Spenda’s current revenue streams comprise:

  • Software as a Service (‘SaaS’) fees
  • Transaction-related payment processing fees, calculated on payment volume processed
  • Payments processed between stores and the NSC offer ‘last mile integration’, enabling full-end automated reconciliation for both the store and the NSC
  • Funding fees on extended credit for stores, on their payments to the NSC, which will leverage funds from Spenda’s debt warehouse facility and utilise Spenda’s Pay-Statement-Link product

Pilot Program

Alongside the offering of lending services, Spenda will also be commencing another pilot program with Carpet Court to incorporate more of its services into individual stores including Standard Operating Environment, Spenda Point of Sale, Spenda Service and Spenda Supplier Early Settlement Discounts.

The launch of this pilot program presents Spenda with fresh revenue opportunities, including one-off implementation fees, ongoing monthly SaaS fees, and Payment Processing fees based on the volume of B2C payments processed. However, the exact revenue figures cannot be determined at this stage and will be subject to legally binding agreements with respect to each initiative.

Looking Ahead

The Company said that the rollout of its services through Carpet Court has been a great demonstration of how it can implement its services, and that with the rollout now complete it is starting to look to the future and focus.

“The Spenda solution is rich in functionality and as such it can often be difficult to showcase the full capabilities of our software in a way that our investors can easily digest,” Managing Director Adrian Floate said.

“The Carpet Court roll out has allowed us to show how we phase implementation and monetise Spenda’s services in clear stages, from acquiring a Node and delivering initial services to the connected Spoke network, and now further upgrading the Spokes with a working capital financing solution, retail software and additional payment infrastructure.”

SPX’s Australian Stock Exchange-listed share price has risen by 18.74 per cent today and is trading at 0.9c today (10:20 am UTC+ 8 hours).

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