Scanning through these slides one could be forgiven for thinking it was at best an ok result.
However upon relistening to it a couple of times there are nuggets of gold everywhere. I encourage anyone who is serious about understanding the opportunity to do so.
The market has all but dismissed SPT now - but if you look at the sp of eg szl and zip, the whole BNPL industry has been smacked and is unloved.
“Wake me up when you start making a sustainable profit” is the mantra. And given SPTs track record of mediocur performance of MSV growth and underwhelming revenue (let alone line of sight to profitability), it’s a fair statement.
Putting the current SP aside, here are some positives to reflect on from the webinar:
1. Large merchant and Distribution partners -SPT in the first half of the year will have signed all target distribution channel partners ( plus many more) that it was aiming to do so for the whole of 2023.
a. Large ent merchants – Google; Ali Express(live after only 3 months); more imminent/likely
b. Large Dist. partners – Checkout.com; Ingenico
c. Acquirers – Worldline(one of largest in world); APPS
d. Network partner – announced by next investor update.
These are not relative small fry merchants like we have signed in the past. They are some of the largest players in the world and the MSV attached to them is mind boggling. Eg Ingenico - 3rd largest POS provider;30bn MSV; APPS >10bn in charge value for >100 ISVs; Ali Express 30bn, - just to name a few
It will take some time to roll these out. But when they do it will result in exponential MSV growth. Keep thinking back end of this year.
2. White label performance with live merchants thus far–
a. Approval rates as high as 85-90% (v 40% for competitors)
b. Take up of our solution –Per Nandan “At checkout the consumers that select the option to do “pay later” is almost 60% because we are right underneath the credit card input field and way above other alt payment methods and BNPL providers.” This is a phenomenal % and even now I’m finding it difficult to believe
c. Barely 12 months in and there are now over 30 implementations and climbing
i.e. white label has been validated and starting to get traction.3. Net transaction margin - will improve and was heading back towards 2022 levels. As seen in march numbers over 1%.
4. Costs – no material change in costs atm for rest of year.
5. B2B solution – big opportunity but only a small part of the business atm. In active discussions and aim to pilot large merchants in this category. Expects this to be a large category for SPT over next 2-3 years.
6. Pay on delivery solution – first of a kind. Cross border purchases will be A $US1 trillion market and given the supply chain issues and resulting delays, this option is very attractive to purchasers concerned with something that doesn’t turn up until several months later
7. MSV targets – He states “We are VERY CONFIDENT we will hit target 7-800m MSV by end calendar 2023. Forecast Numbers are based on a partial set of our partners being very productive. Ali Express Est contribution alone 50-60 MSV.” I’m looking for 1bn plus RR .
8. Growth of partnerships – SPT employees highly incentivized to grow their channel via high engagement with partner. I.e. not just relying on the partner to do the heavy lifting.
9. Timing/location of rollout –
a. Ali Express – live now in Spain, UK, Germany, Aus. with pay on delivery inst solution.
2 of these 4 markets to rollout pay in 3 and pay in 6 this qtr.b. Google expansion likely q3 in time for pixel 8.
c. Ingenico - likely in Europe first in second half of year. (Largest POS there).
I’m sure there were more that I missed.
The second half of calendar ‘23 is where Nandan has said things will start to scale. The next few months will seem like an eternity for some. Its not for the impatient or faint hearted.But its often darkest before dawn….
DYOR.
