Butn continues to deliver record originations as growth accelerates

Butn continues to deliver record originations as growth accelerates

ASX-listed Butn Limited has provided its quarterly activities report for the three months ended 30 September 2022 (Q1 FY23) as growth accelerates for the company.

Commenting on Q1 FY23, Butn’s Co-Founder and Co-CEO, Rael Ross said, “A sixth consecutive record month of originations, quarterly originations exceeding $100 million and quarterly revenue double that of the previous corresponding period all demonstrate the growing need for our fast, secure and reliable funding, supporting SMEs in these challenging market conditions.

“Growth in our platform channel is driving record originations at increasing revenue margin with no additional operational staff, supporting our mass distribution strategy through increased operating leverage. This, together with our strong cash position and additional debt facility post quarter end, provides ongoing momentum through FY23 and beyond.”

Record originations and increasing revenue margin

Butn achieved record quarterly originations in Q1 FY23 of $102.2 million, up 63% on the pcp and 20% on the prior quarter.

September’s monthly originations were $35.4 million, the sixth consecutive record origination month, underlining the growing momentum in the business. The sustained growth reflects Butn’s strong relationship with its platform partners, growth of distribution channels and the increasing awareness of its product offering in the SME community.

Importantly, revenue margin increased to 2.5%, up from 2.0% in the pcp, reflecting a significant improvement in industry mix to higher-margin segments and increased contribution of higher-margin platform originations. This saw Q1 FY23 revenue of $2.6 million, up 110% on the pcp.

Record platform growth from strategic partnerships

Momentum in the Butn platform continues to accelerate with platform origination growth a consistent and growing component of Butn’s overall origination levels.

In September platform originations were a record $8.5 million, approximately 24% of that month’s total originations demonstrating the significant benefits in Butn’s embedded funding technology to leverage and deepen existing strategic partnerships.

The Q1 FY23 platform originations exceeded $21 million compared with approximately $1 million in the pcp, reflecting the rapid growth and future potential of this distribution channel.

Strong financial position, with additional debt facility secured

At 30 September 2022 cash on hand was $12.3 million, providing Butn with the continued financial flexibility to pursue growth opportunities as they arise.

The accelerating record growth over recent months and increasing revenue margin were delivered with no new operational staff and combined with tight cost control have driven a positive EBITDA result for Q1 FY23.

Post quarter end, Butn settled $11.4 million of debt from Noteholders under a new 2022-1 bond. The funds will be used to purchase eligible receivables, positioning Butn for continued origination growth in FY23. Based on Butn’s fast turning receivables book of approximately 6 times per year, the funding will provide around $68 million of additional annual origination capacity.

The additional debt funding increases Butn’s total debt funding to over $70 million, double the debt availability in October 2021.

Summary of Q1 FY23 cashflows

Butn generated increased cash receipts from customers of $2.6 million, reflecting continued origination growth in the quarter compared with the pcp.

Total net operating cash outflows were lower than the previous quarter, with material outflows including staff costs of $0.8 million (including $0.2 million of salary and fees paid to directors and the Co-CEOs), administration and corporate costs of $0.5 million and interest costs of $1.1 million.

Investing cash flows included $0.3 million for Butn fintech development and the purchase of two small complimentary automotive books, together with $7.3 million in growing the receivables book.

Financing cash flows reflected $5 million of additional funding secured, offset by $0.5 million of transaction costs related to both the current and prior quarter’s borrowings.