A solid analysis should be followed up with a valuation!Credit...

A solid analysis should be followed up with a valuation!
Credit goes to steve10 for his wizardry

The sales revenue of $5.3M consists of $4M for payments processing growing at103% YOY + $1.3M for technology sales.

Q1 last year was $3.56M - $2M for paymentsprocessing = $1.56M for technology sales last year. Total revenue YOY growthrate to 49%.

Looking forwards 12 months the payments processingrevenue should double to about $8M + $1.5M technology sales + $935k from ATXallowing for 25% YOY growth = $10.435M x 4 = $41.74M run rate + bankingbusiness revenue.

$10.435M / $5.3M = +96.9% YOY revenue growth.Total revenue growth will exceed 100% YOY with the banking business revenue& increased margins with Visa & Mastercard acquirer licences.

Extrapolate forwards another 12 months & the$8M payments processing revenue should double to $16M + $1.5M technology sales+ $1.2M from ATX allowing for 28% YOY growth = $18.7M x 4 = $74.8M run rate +banking business revenue + new acquisitions revenue. Most likely total revenuewill be circa $84M or about $21M per quarter / $10.435M = +101.2% YOY growth.

The total revenue YOY growth will increase fromabout 50% to 100%.

The RKN dividend is not included this quarter asit was paid manually in October so will be recorded this quarter. Also $261k ininterest/government grants was not included in the revenue as PC doesn't wantthem to obscure the actual revenue.
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Adding my 2 cents. I’ll recap where I think we are currently at conservatively:

Using Judo as a peer, which are currently two years into their banking business.
First year revenue grew from next to nothing to$28.3M after obtaining unrestricted licence & tripled revenue to $89.M inthe second year.

This gave Judo 217.3% revenue growth and themarket has valued them at 2.3b which is X 26 revenue multiple.

If the market values 217.3% YOY growth at X 26
Then the market technically should vale 50% growth at X 6

Currently Novatti has:
100% YOY growth for core business sales
50% YOY growth for total revenue

Using this example lets agree that a fair value multiple for a high growth stock with 50% YOY growth stock is 6 although the next quarter is going to be a massive increase, again let’s keep this valuation simple.





Logical fair value
Q1 FY22 revenue $5.3M x 4 = $21.2M x 6 (multiple) = $127.2M + $17M cash +$23.22M RKN + $24.5M (Banking division - 70% of $35M) = $191.92M MC or 0.59c SP.

Current valuation
$130M MC currently - $17M cash - $23.22 RKN -$24.5M NBHC = $64.72M / $21.2M run rate = x3.07 (which is undoubtedly cheap)

Advancing 12 months, considering the structural growth Novatti has undertaken and its track record

Q1 FY23 revenue $10.6M x 4 = $42.4M run rate thus$64.72M (cash and assets) / $42.4M = x1.53 multiple, however by this time weshould be at 100% YOY growth, with a valuation of X 12

MC = 573.52m / 325,000 shares = $1.76

Bringing this back to the present Novatti is as a multiple of 3.07, Now oncethe back licence is granted, how on earth can the market continue to value themat X 3.07?

My best guess is the market is waiting for three things
Radi licence (Green light to launch the bank)
Visa and Mastercard licences ( Further revenue generation)
Formal Reckon agreement (Confirmation of access to 100k plus SME’s and also lettingthe market know the CR wasn’t for a dividend)

In addition to this Novatti is still waiting on their Lithuanian E-moneylicence which I suspect comes next year (Opening up further revenue opportunitiesin Europe and allowing VERV more independence)

Lastly, the multiple of 6 is very conservative and should not apply once the Radihas been approved.