The San Francisco-based, ASX-listed American loans marketplace backed by billionaire Alex Waislitz and other wealthy investors says it is targeting generating $1 billion in revenue as it expands into the US mortgage market.
Credible Labs, which was the biggest technology IPO on the ASX in 2017 and counts Mr Waislitz, industry super fund giant Hostplus and former Seven Group executive Peter Gammell among its backers, initially made its name in the higher education sector in the US by matching students with loan providers in an online environment.
But after last year moving into mortgage refinancing and since expanding that product into 37 states with six lenders and adding a home purchasing mortgage offering, the group recently struck a trial partnership with Realtor.com, the second-biggest player in the online property space in the US.
“There is no guarantee of a long-term partnership but it is a good early sign that we have the attention of the second-largest platform in America,’’ Credible Labs chief executive Stephen Dash said.
Mr Dash said partnerships would offer the company the distribution channels to “supercharge its business”.“There is no good reason that Credible cannot be a billion-dollar revenue business, given the size of the market and where things sit today. There are other players that are generating $1bn in revenue in the same broad market we are in,’’ he said.“I’m confident that there are large partners out there that will see value in what we have built. I am confident we can land some of those partnerships.”Credible Labs shares have taken off since the group revealed it recorded $US440 million of closed loan volumes in its core education business in the March quarter, up 127 per cent from the volumes generated a year earlier.
Quarterly revenue increased 22 per cent despite a decline in cash flow caused by a $US1.4m increase in receivables.
The shares have risen from the $1 mark in early April to touch a record high of $1.80 a fortnight ago. They closed 3c lower yesterday at $1.65.After the float valued the business — which is also backed by Sydney-based venture investor and advisory firm Carthona Capital and Regal Funds Management — at more than $300m, the shares languished below their issue price of $1.21 throughout last year.
But after Credible Labs’s 2018 full-year results met analyst expectations and more shares became available for trading after being released from escrow, the share price has been on an upward trajectory.
Mr Dash’s presentation was one of the standouts made at the Thorney Technologies forum staged by Mr Waislitz’s Thorney Group in Sydney last month, where the Credible Labs chief executive first revealed his $1bn growth target for the business despite last year posting revenue of $26m.Analysts are forecasting revenues of $43m this year.“Our platform sits along the waterfront of all the main consumer lending products — home purchase and refinancing, student loan origination and refinancing, personal loans and credit cards,’’ Mr Dash said.“We have an ability to be a one-stop shop for a general insurer, wealth manager or a retirement savings platform. Our platform is being fine-tuned for that.”
Prominent US fintech executive Ron Suber is the company’s chairman.
Importantly for Credible Labs, its cash burn slowed significantly in the March quarter. It retained $US26m in cash at March 31 after raising $US40m in capital at the IPO.“So we have two years-plus of cash runway with our current cash resources,’’ Mr Dash said.
Mr Dash, a former investment director at Mark Carnegie’s private equity, venture capital and advisory firm MH Carnegie, left Australia in 2012 to pursue his dream in Silicon Valley and raised $US20m in external capital before the 2017 float.“My message for someone coming over here is that it is very different to Australia. The culture of try and fail is big here. Failure is embraced more here.
“People genuinely like Australians over here, so that is a real competitive advantage to coming here,’’ he said.“The market is so massive that if you can be remotely successful, you can build really big businesses.”
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