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- 29 October 2021 16:48
Butn delivers record quarter in originations
Newly listed fintech Butn Limited (ASX:BTN) has increased originations by 35 per cent to a record $62.8 million over the prior corresponding period (PcP).
Butn focuses on transactional funding by funding SME businesses through their working capital constraints by financing individual transactions, leveraging the end debtor’s credit.
Since its IPO on 6 July in which it raised $20 million, the main drivers for the result were an acceleration of the roll out of strategic partnerships. These were headlined by deals with MYOB for invoice finance product, Ola to deepen Butn’s automotive funding reach, and with Agentbox and Ready Media in the real estate sector.
This growth was achieved in the context of COVID-19 lockdowns across both New South Wales and Victoria, Butn’s two key geographic market segments, highlighting the strength of the company’s platform and products that are increasingly resonating with SME businesses.
Butn continued with a conservative deployment of funds to maintain its industry low non-recoverable write-offs of under 0.1% of originations. The receivables book, turning on average 6 times per year, has grown approximately 30% on PcP with no indication of material increases in non-recoverable write-offs during the quarter.
Net revenue was $1.3 million, up 14% on the PcP. COVID-19 has extended segment mix impacts, with some higher margin segments (such as automotive and insurance) impacted more than lower margin segments (such as FMCG) reflecting in a lower net revenue margin. As COVID-19 restrictions ease, these impacts are expected to reduce. In addition, the net revenue margin on funding through Butn’s fintech solution is significantly higher, which will increase the overall net revenue margin over time.
Butn Co-founder and Co-CEO, Rael Ross said, “Over the past few years, Butn has developed a proprietary fintech solution that digitises and automates customer on-boarding, credit and risk assessment, funding and collections. We have transformed a previously manual process into an automated one that can be completed in minutes. By integrating into third party digital platforms we are able to distribute Butn’s funding products to business users in their known, trusted environments where they are continually transacting.
“The strong start to FY22, delivering a series of key operational and financial milestones, showcases the ability of Butn’s platform to rapidly scale. Over the first quarter, the Company generated record originations of $62.8 million, up 35% on the prior corresponding quarter, underpinning growing net revenues and customer receipts.
“The first quarter also saw the accelerating roll out of strategic partnerships with major global organisations including MYOB and Ola, building on Butn’s differentiated business to business [B2B] funding model. The Company’s successful IPO provided growth funding and introduced high quality institutional, professional and sophisticated investors to Butn’s share register.
“Butn’s success over the past quarter could not have been possible without the hard work and commitment of our team. They have a true passion for our business and are focused on the essential things needed to be done to deliver on the exciting growth opportunities we see for Butn. We welcomed Ash Goldman as Butn’s Head of Partnerships and Revenue, and Helen Louise Lea as a nonexecutive Director and MYOB Australia’s appointee, as well as continuing to build our in-house operational and technology teams to support future growth.
“The first quarter of FY22 has seen the business systematically and progressively roll out our funding products to a rapidly growing business user base. With a strong team in place and a growing portfolio of B2B funding products, our clear priority is executing a high growth sustainable business based on a proven funding approach, innovative technology, with strategic partnerships across industries.”