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- 28 January 2022 16:41
Butn achieves record month and quarterly originations
Butn (ASX:BTN) had a bumper quarter, continuing to grow originations in Q2 FY22 to another record $64.8 million, up 26% on the previous corresponding period (pcp).
The company, which automates end-to-end business transaction funding that assists SME businesses through their working capital constraints, also had record monthly originations in December 2021 of $25 million, up 44% on pcp.
This growth was achieved against the backdrop of ongoing COVID-19 challenges across both New South Wales and Victoria, Butn’s two key geographic market segments, highlighting the strength of the company’s platform and products.
Butn’s Co-founder and Co-CEO, Rael Ross said, “Butn’s unique fintech solution provides embedded customer on-boarding, credit and risk assessment, funding and collections. We have transformed a previously manual process into a simple automated one that can be completed in minutes. By seamlessly 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.”
Net revenue was $1.4 million, up 21% on the pcp. COVID-19 continues to impact segment mix, with some higher margin segments (such as automotive and insurance) impacted more than lower margin segments (such as FMCG). The revenue margin is expected to improve as COVID-19 impacts lessen. In addition, the margin on funding through Butn’s fintech solution is higher, which should in time positively impact the overall revenue margin.
Strategic partnerships included OZEDI which substantially expands Butn’s addressable customer base as it is one of Australia’s largest digital delivery providers across superannuation, payroll and e-invoicing to business and government. Butn also increased its position in freight sector with Freightlancer, Australia’s largest freight marketplace provider and a subsidiary of Freelancer Ltd (ASX: FLN).
“The second quarter of FY22 has seen the business continue to systematically and progressively roll out our funding products to a rapidly growing business user base. Our recent partnerships with OZEDI and Freightlancer, as well as progress of strategic partnerships with major global organisations such as MYOB, are supporting strong growth, building on Butn’s differentiated business-to-business funding model.”
Butn appointed Patrick Crivelli as its Chief Risk Officer. Patrick has over 20 years’ experience in SME funding, invoice financing, cashflow funding and investment analysis having worked across large corporates and early stage fintechs. Patrick brings a proven track record in building fintech platforms, leveraging technology to deliver superior risk management and customer experiences.
Over the past twelve months Butn has largely in-housed its technology team, supporting future growth, reducing reliance on third parties and enabling operating leverage as the business scales.
“Achieving these key operational and financial milestones showcases the ability of Butn’s platform to rapidly scale. Over the second quarter, the Company generated record originations of $64.8 million, up 26% on the pcp, with December proving a record month for originations at $25 million, up 44% on the pcp, underpinning growing net revenues and customer receipts.
“With a strong team in place and a growing portfolio of B2B funding products, the business remains focussed on executing its high growth sustainable business based on a proven funding approach, innovative technology, with strategic partnerships.”
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 has grown approximately 50% on the pcp with no indication of material increases in non-recoverable write-offs during the quarter.