Australian finance service company Butn (ASX: BTN) has reported a strong performance for Q3 FY23, with record originations and revenue. The quarter’s loan originations totalled $109.0 million, up 77% on the previous corresponding period, with March representing another record month with $41.1 million in originations. Butn’s quarterly platform originations also increased significantly, up 158% on pcp to $25.8 million.
Butn is a digital finance company that provides fast funding to businesses in need. It also allows B2B companies to manage cash flow, taking care of their invoicing and such.
The Company’s revenue for the quarter was $3.1 million, a 151% increase on pcp, with a revenue margin of 2.8% compared to 2.0% in the pcp. Butn raised $2 million through an institutional placement and secured an additional $4 million in debt funding during the quarter. Its closing cash position was a sweet $12.4 million.
Butn’s Co-founder and Co-CEO, Rael Ross, said, “Butn continued its strong financial performance delivering an all-time record quarterly revenue of $3.1 million, more than double the previous corresponding period. The quarter’s originations were 77% higher than the pcp, and included our highest origination month ever, despite Q3 typically being a slow quarter historically.”
In addition, Butn’s revenue margin increased to 2.8%, up from 2.0% in the previous corresponding period. The higher margin was due to increased contributions from the Company spending a significant chunk of its IPO earnings on new platform originations. Plus, it adopted an improved industry mix towards higher-margin segments, and pass-through pricing adjustments.
Butn’s platform lending grew a lot, with over $25 million lent out, a 158% increase from the same period last year. In March, one out of every four loans came from their platform. More people are also signing up and using its funding technology through their partnerships.
Ross added, “In addition, Butn successfully completed both debt and equity transactions demonstrating investor appetite and support for the business, which together with our strategic partners is on track to deliver a strong close to FY23.”
Butn raised $2 million through a placement to Regal Funds Management, a long-term institutional investor, during the quarter. The funds will be utilised for working capital and to support the business’s growth. Additionally, Butn secured an additional $4 million in debt from Noteholders through a tap of the 2019-1 bond. This funding, based on Butn’s rapidly converting receivables book, will provide roughly $25 million in additional annual origination capacity, bringing Butn’s total annual origination capacity to around $470 million.
Operating outflows for the quarter included staff costs of $1.3 million, administration and corporate costs of $0.6 million, and interest paid of $1.3 million. Investing cash flows included $0.3 million for Butn fintech development, together with $3.9 million in growing the receivables book.
The successful completion of both debt and equity transactions demonstrates investor appetite and support for the business, and Butn, together with its strategic partners, is on track to deliver a strong close to FY23.
Alinda is a Business Reporter for The Sentiment
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