In the bear case, I would note:
Where will the money come from? It seems that SPX is not earning much if at all on current payment volumes. It seems to me that it is because a) they do not charge Saas fees for providing the payment infrastructure (or very little), and hence b) they only earn fees for payments with cards. If that's right then every B2B channel will only generate revenues for SPX for that portion of payments processed with cards. Likely greater when the paying businesses are small. The B2C space might be more promising, when it comes at the distribution end of B2B client.
Lending has not grown much. The book is not much larger than before the warehouse. We don't really know why. Financial resources constraints (first loss + financial covenants), product fit (design, pricing), demand (turnovers are generally down) or even availability of such DW (reported in the financials as $15mio, not $50mio).
Generally, the firm does a pretty poor job in reporting its financials. It is incoherent, often uses wrong words to describe revenue stream (recurring revenues is the most "hilarious" example...). Financial risk management is also very questionable. Runway was very tight in the last quarter of FY23, relying heavily on options that had little chance of being exercised, and raising capital at SP rock bottom (almost). The CFO could take some upgrade.
AF will struggle in from of larger investors to raise capital and debt. Debt is probably where he is the most likely to fail. Used car salesman style does not work well in front of boring bankers. Yes, he found $50mio DW but as noted above, it is unclear to me whether that was committed. The financials represent a committed line of $15mio, not $50mio.
AF has often been overly optimistic to say the least on delivery timelines. Payfac is so last year... DW was so 2021... Capricorn was so 2020... etc etc...
Governance is poor. AF owns too much. Bonuses are paid when performance has been poor. Chairman doe snot his job in keeping AF from making inaccurate public statements.
In the bull case: There is a lot to do in this space, and Capricorn is not only a big client but should give them a lot of credibility to do more.
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