Credit Clear delivers record revenue in excess of $20 million
Australian technology and debt collection provider Credit Clear have announced its results for the financial half year ending 31 December 2023 (1H’24).
Credit Clear delivered record revenue of $20.03 million, up 15% on pcp, tracking ahead of guidance which has now been upgraded from $39 million – $41 million to $40 million – $42 million for FY24.
A strong improvement in profitability was achieved during the half, with Underlying EBITDA margin to revenue improving from 0% to 9%. Underlying EBITDA of $1.8 million, was an improvement of $1.8 million on pcp, prompting an upgrade of the company’s FY24 Underlying EBITDA guidance from $1 million – $2 million, to in excess of $3 million.
Gross margin expansion to 54% was achieved, up from 50% in 1H’23, driven by efficiency gains from the deployment of technology in the ARMA Consumer Division.
Credit Clear had circa $13.0 million cash at bank on 31 December 2023, a $3.7 million improvement year-on-year, a strong result given that $0.5 million was paid for the DRA acquisition during the half.
Digital technology
Payments made via the high-margin digital platform grew 72% pcp to $52.9 million, surpassing $50 million collected on the digital platform during a half for the first time, with the company’s Consumer Division continuing to adopt and deploy the technology as it onboards large new tier-1 clients.
Digital collections now account for 58% of the Consumer Division’s payments in portfolios where digital has been deployed, and where the ongoing transition to digital engagement is positively impacting the Company’s collection performance and profitability.
New clients
Credit Clear signed 225 new clients during the half, up 24% on pcp. The half was again characterised by signing several tier-1 and tier-2 consumer businesses (non-bank credit providers, energy retailers, and insurers) that are seeking new and innovative engagement strategies while also looking to introduce a new independent provider onto their collections panel to strengthen their collection capabilities in the current challenging economic environment.
Macro-economic environment
The macroeconomic environment continues to be favourable for Credit Clear. The recent reporting period has shown that many of Australia’s largest businesses (by size of customer base) have taken proactive steps to prepare for an increase in the number of customers that are expected to fall behind on their accounts.
Commentary from bank CEOs is that customers were still getting used to higher interest rates and cost-of-living pressures, with many forced to cut back on spending to adjust. They noted that the November rate rise will only now (February 2024) begin to be felt by mortgage customers.
With that hike, and the expectation of a slowing economy, the pressure on households, higher prices and cost of living, will be challenging for a broad spectrum of Australian households, including higher income mortgage holders.
Similarly, large utility providers have reported a sharp rise in their net bad debt expense. Often seen as a precursor to pressure being felt in other areas of the economy, utility providers have a broader sub-set of the Australian economy as customers and would be more reflective of true economic pressures felt in the population.
Credit Clear CEO, Andrew Smith, said, “We have delivered strong performance in the first half of FY24, tracking ahead of financial guidance and positioning us to upgrade our guidance for the full year. The company’s robust financial position, expanding client base, and innovative technology solutions positions us to support our growing client base in the current economic environment.”
