I can't give you an exact breakdown of how I believe the 10m will be made up however, I think the income will be primarily generated through the payment and remittance services. I also believe that 10m will be at the bottom end of their expected 2020 revenue projections. If they can achieve 40% revenue growth again as they did from 2018 to 2019 then they will be looking at around 12.5m. If we look at Novatti's revenue in 2019 which was 8.4m excluding +460k to the parent company Novatti Group. The income came from...
1. Novatti Platform (2.3m/27%) where they design create and sell mobile payment technology (including BNPL SaaS solutions) and thus there are SaaS income, service and maintenance income and licensing fees. 2. Billing solutions (2.2m/26%) for the utility sector 3. Global Transaction Services (3.9m/46%) i.e. remittances and vouchers (i.e. Flexewallet and Vasco Pay) 4. Novatti B Holdings (0) (hold RADI Banking Licence)
The reason why I believe 10m will be at the low end is the company is was already growing strongly (revenue was up 32% last quarter compared to the corresponding quarter). This will now be further assisted by the VISA issuing licence which should help drive an increase in Billing revenue and as a part of the IBM worldwide network block chain payment system the cross border payment and remittance services will be further enhanced. However, the Novatti Platform income stream (further sales and maintenance contracts) cannot be discounted as can be seen by the purchase of these services by BNPL company Slice Payments (300k revenue in 2019) and Cross-border payments network company SendFX (up to 90-250k/year revenue in transaction fees) for services rendered which has the potential to generate significant revenue on top of the % ownership Novatti now has in both of those business. On top of all of this is the decreasing AUD which is favourable for Novatti since 76% of their revenue is from outside of Australia and of course their is the potential for significant revenue increase as a result of a RADI banking licence and thus deposit taking and banking services revenue. When you look at the Novatti Group operations it was the logical step to gain a banking licence and investors need to remember that the banking licence is a bonus albeit a significant one to a company that was already growing strongly through effective revenue generating investments and bringing in >10m in revenue before the banking arm contributes any revenue. Cheers
NOV Price at posting:
20.0¢ Sentiment: Buy Disclosure: Held
