Novatti Group announce quarterly revenue up 13% to $12.9 million
Novatti Group, a leading fintech enabling businesses to pay and be paid, have release their September 2024 quarter (Q1 FY25) Activities Report.
Novatti’s turnaround strategy, which has been progressively implemented by the company’s new management team over the past year, is already delivering benefits. Novatti’s revenue increased to $12.9 million in the September 2024 quarter, up 13% on a preceding quarter basis. Cost efficiency was also much improved in the latest quarter, with expenses falling by 11% on a QoQ basis to $5.5 million. Another Q1 FY25 highlight was continued growth within Novatti’s core business, Payments AU/NZ, with GTV increasing by 7% and revenue up by 9% on the prior quarter – both excluding the impact of our previously announced deliberate exit from specific low profitability wholesale Cross Border services.
Mark Healy (pictured), Novatti Group CEO, said, “Since Novatti’s turnaround strategy was set in motion in Q1 FY24, we have seen a 26% increase in quarterly revenue and a 29% decrease in quarterly expenses, highlighting the significant progress already made. These metrics also demonstrate how the business can continue to grow while operations are streamlined and costs are reduced.
“Moving forward, further significant growth and performance improvements are expected to be achieved by the core Payments AU/NZ business, which will help realise the target uplift in gross margins from 44% today to 70%+ in FY27. Initiatives undertaken in Q1 FY25 were aimed at deepening our progress here, including tackling structural reforms. This included the exit of non-core businesses and investments, such as Novatti’s interest in the International Bank of Australia and simplifying the business as we move towards positive operating cashflow, including ceasing wholesale Cross Border services, while retaining direct to business relationships.
“In the September 2024 quarter we also started to see the first benefits of recent investments in technologies to enhance internal workflows. This included implementing process orchestration and data management software to unlock efficiencies in key areas like merchant onboarding, support and payment operations. These recently introduced tools will reduce friction and enhance customer experience, accelerating the onboarding of Novatti’s merchant acceptance pipeline (500+) across the remainder of FY25.
“Importantly, these efficiency gains, alongside the ongoing simplification and the consolidation of shared services, have enabled further cost reductions, with $2.8 million in annualised expenses identified to be removed in Q2 FY25. Completion of this next phase will result in a total of $9.8 million of annualised expenses removed from across Novatti during calendar year 2024, underpinning our drive to achieve positive operating cashflow.
“Some of the structural reforms we have undertaken in Q1 FY25 have resulted in a short term, negative financial impact, particularly in cash used in operations. This has included the ongoing removal of historic liabilities to improve the working capital position and to strengthen Novatti’s balance sheet. While the positive impacts of these measures were not evident in Q1 FY25’s cash use figures, cash outflow will be trimmed in coming quarters, headed by the additional $2.8 million annualised cost reduction program to be implemented in Q2 FY25. We will also continue with the divestment of non-core assets, streamlining of the existing business, and the exit from unprofitable services.
“Notwithstanding these structural reforms, Novatti continues to gain commercial momentum in pursuit of its market led, customer focus, as highlighted by the sustained growth in the Company’s revenue base. Here we are focussed on building traction in education, real estate, and hospitality, with these efforts to benefit from the capital raising initiative announced in early Q2 FY25.
“Ultimately, all these changes help underpin progress towards Novatti’s targets of monthly positive operating cashflow by January 2025 and positive operating cashflow for the half-year ending June 2025, while simultaneously recording sustained growth in the overall business,” Healy ended.
