How far can you go as a business with only a little over $4 million in your bank account? Frankly, not a lot. However, Fintech company IOUPay (ASX: IOU) feels otherwise as it reports an operating cash outflow of $1.7 million in Q1 FY23, leaving the Company with only $4.1 million in its bank accounts.
With reports of Buy Now, Pay Later (BNPL) schemes driving Gen-Z into debt, many companies are facing increased pressure to depart from this once-upon-a-time transformational payment mode. However, IOUPay refuses to budge, insisting that there’s more to it than meets the eye…or the wallet.
This quarter, receipts from customers were $10 million, down from $11,406,000 last quarter. This reflects customers’ declining interest in BNPL transactions. IOUPay arrived at a net operating cash outflow of $1,708,000 after paying out $8,873,000 to come back as part of customer BNPL instalments. This net cash outflow figure includes product and manufacturing costs of $1,300,000 (up from $1,063,000 last quarter).
The Company saw transactions worth $9.5 million, with revenue amounting to $591,129 for the period. Effective annualised returns for individual transaction profiles remain within the Company’s target range.
The Company’s Non-Performing Loans, valued at $223,799 and an NPL Ratio of 0.68% represents a marginal increase from the previous quarter. IOUPay is using this amount to focus on targeted consumer acquisition processes, including sophisticated credit checking technology to authenticate customers and independently verify credit profiles, as well as its continuous assessment and management of merchant relationship performance.
Managing Director, (Aaron) Lee Chin Wee, shared, “The Mobile Banking business continues a positive outlook with healthy transaction volumes and capacity for growth following the infrastructure upgrade. The Company is seeking a greater share of the market by developing new client relationships and capturing more volume from existing clients.”
IOUPay continues its focus on building a community of quality merchants and consumers as part of its ‘best-in-class’ brand positioning in South East Asia. There are now more than 2,700 merchant outlets that are system active on the myIOU platform across thirteen industry verticals, with Malaysia being its frontrunner.
During the September quarter, the Company established a range of new partnerships and relationships in a bid to increase its adoption. Among the top new relationships are those with two payment platform providers, AsiaPay and ManagePay.
AsiaPay Malaysia is a wholly-owned subsidiary of AsiaPay Limited, based in Hong Kong, and it supports more than 200 merchants to accept digital payments. IOUPay is working with AsiaPay Malaysia to integrate its solution into AsiaPay’s payment platform. Phase one involves integration for e-commerce payments with a target completion of December 2022. Phase two integration for instore purchases via POS terminals is currently in the planning stage.
From the looks of it, the Company is not totally unaware of the fate that has befallen BNPL. Perhaps in keeping with that, it has introduced a host of updates to its myIOU 2.0 app, rolled out this quarter. It is currently working on phase 3 of this rollout, and that will include a mini shopping cart to cater to the online shopping boom.
Though IOUPay is giving due attention to fostering “profitable” relationships, it might bode well for the Company to focus on raising more capital, asap.
Alinda is a Business Reporter for The Sentiment
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