Ann: Spenda secures $50m debt warehouse facility, page-131

Howdy Mondy,

I am directing this to you as I actually appreciate what (to me) appears a critical eye on finances.

To be clear, in regard to my position on SPX, I hold (as you can see), and in response to the annouced 4C, I remain 'curious' and slightly intrigued by what I have seen and read today. I am actually holding judgement.

I have read and re-read the 4C and there are some things in their that go to why I remain intrigued. I would appreciate your thoughts, if you wish and have the time.
Also, it's dificult to convey via email, but although my questions are framed optimistically, I am not trying to be some smart arse, or catch you out or anything similar. Just to put that on the table.
The other thing is finances is not my strength, so hence I'm really just seeking to understand whether my interpretation of things could be right or not.

The company has clearly two streams of revenue - payments and lending. So my comments and queries relate to what I have read in the 4c as it relates to these core activities.

(a) Lending - the 4c indicates that the lending capability has not changed from last quarter to this. That is, they utilised ~$12M of their own cash for th past 6 months to provide lending capacity primarily across same businesses in Ag, Manfufacturing and Services, who made up 75% of this total lending. That Q on Q this lending hasnt really chnaged in either size of sector.
In short, the lending has essentially remained stable / no growth Q on Q, most likely constrained by lending capacity, if the graphs are to be taken as read. Is that your reading of it?

(b) Payments - as I understand it this is the 'clip per transaction' and uses payment flows (measured in $'s not number of transactions) as an indicator of growth.
Do you think 'payment flow measured in '$'s' rather then number of 'clips / transactions' is the right measure?

(c) Here's the reason I asked question above. The 4c states......"new and existing customers resulted in a 500% growth, compared to the prior quarter, adding $3.5m in payment flows. Revenue generated from this growth in payments flow will be reflected in cash recipients in the coming quarters". The payment flow has increased from $700K last quarter to $4.2M this quarter, but no additional revenue captured in this 4c.
Do you think that the significant increase in payment flows, coupled now with DW, provides the basis for some signficant uplift in lending potential / income, adding to that the inclusion of the payment flows receipts in the next quarter. That (if true) could see significant increase to revenue next quarter?

(d) The 4c states...."Cash receipts from customers continue to increase, with cash receipts for the current quarter totalling $693k, which delivers full year FY22 cash receipts of $2.3m, representing a +107% growth from full year FY21 and a 10% increase compared to the
prior quarter. Annual Recurring Revenue (ARR) continued to grow and now comprises 95% of the Company’s revenue."
The ARR (as I undersatnd) is generally revenue generated on an ongoing basis, and is essentally considered baked in year on year, such as subscriptions for service / software.
Do you think that given the 500% increase in payment flows, but only a 10% increase (Q on Q) in receipts from payments, that there is a fair bit more potential for cash receipts from payments likely to emerge in next quarter?

Finally, (if you managed to get this far!!) my final query / analysis is this.

SPX seems to have not increased lending, but has increased payment flows, though notably the related revenue ('clips') not accounted for in this 4c.
So, with future potential to increase lending 4-fold ($12M to $50M), and in the context of a known 6-fold increase in payment flows ($700k to $4.2M this quarter) ......does this change in the fundamental financial capability / capacity signal a potential significant increase in both lending and payment revenue in the next quarter?

Appreciate your thoughts, but appreciate that maybe bit to ask from some anonymous poster on a HC forum!!!.

If anyone else out there willing to engage / share expertise would be great also.

Cheers
EB