Interesting post I've cherry picked from another company's...

Interesting post I've cherry picked from another company's discussion that involves SPT... Posted by 'Silent-Bubbles'

'...But if we digress for a moment and look to the half year report to 30 June 2020 of Splitit , we could summarize their figures by highlighting the working relationship that they had with their approximately 2 million of ' restricted ' cash PLUS approximately $25.75 million of cash and approximately $31 million in trade receivables - which was in turn ALL supported by a combined working ' non current ' liability of $13 million of interest bearing loans together with a ' current ' figure of interest bearing liabilities of $26.5 million. So effectively 4 times the restricted cash of CRO combining with approximately $58.75 million in working assets supported by $49.5 million in combined working liabilities - highlighting a real difference of around $10 million.

Whereas if we look at Sezzle's Balance sheet ..... They had US $52.78 million in Cash ( mainly due to a recently finalized raise ) , US $2.93 million in restricted cash and US $44.63 million in merchant debtor notes - and ALL against a ' current ' merchant accounts payable figure of US $39.2 million together with a US $36.617 million drawn revolving line of credit credit loan from a US $100 million warehouse facility provided by Bastion Consumer Funding II, LLC,Atalaya Asset Income Fund Iv LP, and Hudson Cove Credit Opportunity Master Fund, LP “ theSyndicate.”

And so then if you compare these TWO BNPL players with say that of the more mature Humm Group ( Formerly Flexigroup ) , you will find despite that fact that annual turnover from customers is more or less the same as Sezzle, with approximately the same number of consumer customers , and roughply 3.5 times the merchant customers with its 73,000 compared to 20 odd thousand with Sezzle - You basically have a Fintech Company in Humm which has a balance sheet roughly 28 times larger than SZL , and approximately 32 times that of Splitit . Even if you allow for the fact that Humm has approximately 23% of its Income generated from corporate leasing as against consumer customer loans - with roughly half the leasing income due within one year with 75% of the corresponding customer loans class due in the same timeframe you still get a balance sheet which is much larger Perhaps this leasing feature was why KKR was rumored to have a particular affinity and interest in a tilt at Flexigroup back in August 2020.

So how then as an Investor do you reconcile the fact that Humm is only 30% larger by market capitalization that SPT , and SZL who is more closely measured by statistics to Humm than SPT , has a balance sheet 28 times smaller than that of Humm but is more or less the equivalent as measured by market capitalisation.

And you begin to understand the answer when you go on to look at ALL 3 of these peer group companies , where it appears they all share the same common leverage from their respective ' revolving lines of credit , corporate loan facilities , and recent equity raisings - but at the same time , they ALL seem to be striving for some level of distinct ' Diversification ' and ' Differentiation ' in their product offerings. Quality of Merchants and not so much consumer customers must also play a significant role in the Markets and Investors perceptions of value. And at a quick glance at Splitits as disclosed in their last market update , there is nothing really by way of Customers that immediately ' Pop Out ' at you as being over the top impressive accounts. And yet the market seems to have not discounted their value on the basis of these B2B declared ambitions. So is it more about their initiatives on their B2C ?......

Irrespective of these points , it would seem that the market likes the fact that SZL is pursuing strong growth from globalisation and in particular Canada where the growth is currently outstripping it's US figures . On top of that they have only recently soft launched themselves into the much anticipated high growth market of India ....all the while Humm seems to be only just getting started with its global growth strategies and it's targeted increased revenues from the $10,000 transaction category.

Splitit on the other hand who has much less merchants and customer users but more or less the same relative growth in numbers statistics and yet seems to be targeting account holders and merchants who are using their OWN available card credit balances ( refer below overview from their annual report ) , and so do not have to leverage their balance sheets off larger credit warehouse facilities. They are simply acting as transaction ' intermediaries ' and clipping the fess ticket on the way through. Eitherway , the market seems to like their model with a balance sheets 32 times less than Humm but with a market capitalisation of only 30% less.

The Company ( Splitit ) also integrated with B2B and B2C payment platform Blue Snap, and further enhanced itsintegration with open-source e-commerce platform, Magento.

Splitit launched a distinctive new brand story and visual identity during the half. The new brand platformis designed to differentiate its product and significantly drive merchant sign-up by highlighting Splitit'sone-of-a-kind advantages and creating a unique visual device that is exclusively Splitit’s own. The newbrand targets merchants, as well as established and financially savvy credit card holders who spendmore on considered purchases, promoting Splitit as the only buy-now-pay-later solution that empowersshoppers to use the credit they already have to pay over time on their terms — with no applications, nointerest, and no fees.

So while Splitit has it's Magneto ecommerce platform with its 250,000 reported worldwide merchants together with it's ' All- in- One ' payments gateway provider BlueSnap with its offering to its Australian Businesses of it's 30 odd Global Banks , Cirralto has it's BPSP agreement with FISERV with it's thousands of Global Financial Institutions and KKR who bring to the table both their ' Deal Making ' abilities and equity funding to their last reported 550,000 MYOB SME and ERP users and customers.

Incidentally , it is worth mentioning as well that Bluesnap entered a partnership with First Data ( now FISERV ) back in October 2018and which pre-dated the takeover of First Data by FISERV as follows from this announcement by BlueSnap :-

NEW YORK, October 10, 2018, First Data (NYSE: FDC), a global leader in commerce enabling technology, and BlueSnap, a payments technology provider, today announced a partnership to combine the power of BlueSnap’s All-in-one Payment Platform with the suite of global and local payments solutions offered by First Data. The partnership will also provide BlueSnap with access to First Data’s distribution partners, including some of the world’s largest banks, with First Data serving as BlueSnap’s primary provider for all acquiring, processing, and settlement of payment card transaction and related services.

“ We are thrilled to bring BlueSnap into our ecosystem of highly secured, diversified global payments solutions,” said Frank Bisignano, Chairman and CEO of First Data. “BlueSnap’s platform and services are uniquely suited for medium-sized businesses and combined with access to First Data’s global payment platform and our significant distribution channels, we are confident that BlueSnap will further enhance how businesses accept payments. ”

As part of the agreement, First Data and BlueSnap will work together to introduce BlueSnap’s ecommerce services to First Data’s bank and distribution partners, providing its clients with the innovative tools that are necessary to match the expectations of an evolving global economy.

“ As the number of payment methods, integrations, and check-out flows endlessly expand, providing a single platform to consolidate them brings value to business owners looking to analyze their data to make business decisions,” said Ralph Dangelmaier, CEO, BlueSnap. “First Data is an optimal partner because only First Data allows merchants to seamlessly integrate with BlueSnap and with one integration, instantly be connected to dozens of local banks .”

So comparatively speaking then , doesn't Cirralto's model have a similar capability through the credit approval and card holding capacity of it's targeted merchants and customers which in turn allow for the same ' Credit Backing ' of the customer's own cashflows , Sales / debtor's and net balance sheet assets. And given the commonalities between FISERV - BlueSnap - Cirralto - mighten we also eventually see a potential market tie-up or at least a ' carve up ' in the Australian Market between say Cirralto and Splitit. So then all of this comes down to customer composition and quality I feel.'