Spenda Limited (ASX:SPX) has released its Quarterly Activities and Cash Flow report, outlining key achievements, partnerships, and operational developments for the second quarter of fiscal year 2024, ending 31 December 2023.
Record Cash Receipts
The Company’s financial position reveals significant growth, marked by cash receipts from customers totalling $1.38 million for the quarter – an impressive 84% increase from the previous quarter.
Figure 1: Cash receipts from customers.
At quarters end, the Company boasted a solid cash position of $6 million plus $12.9 million in the gross client loan book, representing loan capital deployed to multiple customers.
New Revenue-Driven Partnerships
Spenda solidified several strategic partnerships throughout the quarter, laying the groundwork for multiple projects set to generate diverse revenue streams over time.
Notable collaborations include an agreement with AgriChain in October, aiming to integrate early payment services for grain growers within AgriChain’s ERP system.
Additionally, December was marked by two significant partnerships: a 10-year Master Services and License Agreement with Capricorn, positioning Spenda to benefit from increased ecommerce volumes through Capricorn’s extensive network; and a collaboration with eBev for integrated payments solutions across the hospitality supply chain, with an initial rollout to 100 clients over three months.
These partnerships validate Spenda’s unique Node-to-Spoke model, showcasing its capability to administer payment flows throughout the supply chain, with the expectation of generating sustainable, recurring revenue at attractive margins.
Figure 2: Total Payments Volume.
Supply Chain Funding via AirPlus
In November, Spenda partnered with international corporate payment specialist AirPlus, signing a payment processing agreement.
This collaboration introduced a virtual card product, enabling Spenda’s clients to generate credit card numbers for specific purposes or durations.
Utilising Spenda’s AP and Payment Widget software, clients can access funds for purchases, enhancing the scalability of payment volumes.
This strategic alliance has not only expanded Spenda’s market reach but also initiated collaborative efforts to explore growth opportunities for the virtual card product, both domestically and internationally.
Steady Growth in Payments and Lending
Spenda reported stabilised payments and lending volumes, with total payments reaching $64 million, up from $61.8 million in first quarter of fiscal year 2024.
Table 1: Net cash position
This 35% increase from second quarter of fiscal year 2023 was primarily driven by heightened payments through the successful rollout of Spenda’s infrastructure to the Carpet Court network.
This network, comprising 205 franchise retail stores, contributes approximately $20 million per month, with all payments processed through the Spenda platform.
Anticipated scaling in both B2B and B2C payments volumes, along with expanding market share in Carpet Court’s B2C payments to approximately 25%, positions the Company for continued growth.
Additionally, the loan book stood at $12.9 million as of 31 December 2023, reflecting a $643,000 increase from the previous quarter, maintaining consistent yields and an overall average portfolio yield of 21.2%.
Table 2: Summary of operating expenditure
Innovative Product Development
During the quarter, Spenda’s development team concentrated on four key areas within its product development initiative.
The extension of the payment engine to facilitate scheduled payments across various methods, including Account to Account, Credit Card, Spenda Finance, or Virtual Card, was a notable achievement.
Progress was made in revamping the onboarding process for Spenda’s Accounts Payable service, offering new users a guided tour to seamlessly connect their financial systems, add payment methods, invite others, and initiate their initial payment.
The team initiated the development of virtual credit card options, collaborating with AirPlus as a third-party provider to offer enhanced security through on-demand generation and immediate destruction post-purchase.
Additionally, work began on the retail Standard Operating Environment (SOE), focusing initially on Quote-to-Pay functionality, aiming to streamline workflows, enhance customer experience, and fortify customer loyalty.
Following the close of the quarter, Spenda disclosed a binding agreement for a significant new cornerstone investment from Capricorn Society Ltd.
The private placement, raising $7.175 million, reflects Capricorn’s decision to invest after conducting thorough due diligence, highlighting their confidence in Spenda’s unique payments software and its anticipated earnings potential, as outlined in the ASX release on January 29, 2024.
Spenda has shifted into high gear with a range of strategic initiatives, including the ongoing Capricorn DSD project and the exploration of new ventures with Capricorn.
The focal point remains on the extensive rollout of B2C payments in the Carpet Court store network, complemented by continuous collaboration with Carpet Court for the SOE solution implementation and the introduction of new B2B suppliers.
Concurrently, the initial rollout of Airplus facilities across the customer base is in progress.
Spenda is also actively involved in integrating payment solutions into the eBev platform, capturing B2B payment flow, and initiating B2C payments across the eBev customer network.
This quarter’s agenda is rounded off by a dedicated effort to refine the customer acquisition strategy, with a strong emphasis on achieving high return on investment and ensuring rapid scalability.
Anticipating new partnerships and heightened program activity, Spenda is poised for yet another record-breaking revenue next quarter.
Spenda’s Chief Executive Officer and Managing Director, Adrian Floate, commented on the quarterly report.
“In the last quarter, we signed multiple partnerships which have the potential to transform the commercial potential of Spenda,” he said.
“We have seen the early signs of revenue contribution from these new programs of work, with the establishment of recurring revenue streams to occur in 2H FY24. Our focus is now on integrating our payments infrastructure, onboarding our client’s clients to increase the payment flow on our platform and scaling our business over time.”
“We are excited to welcome Capricorn as a substantial and supportive shareholder and we continue to identify new opportunities to work together. We remain confident that we will see the inflection point in revenue and earnings in 2H FY24.”
SPX’s Australian Securities Exchange-listed share price has risen 16.67% today and is currently trading at $0.014 (11:30am UTC+ 8 hours).