Online transactions surge through COVID-19 lockdowns as Novatti acquires Emersion

As society is bunkered down in self-isolation to prevent the spread of COVID-19, fintech company Novatti (ASX: NOV) has acquired payments platform Emersion with both businesses seeing a rise in online payment processing revenue to accommodate the new contact-free world. 

The acquisition will see Emersion integrated into Novatti, bringing with it the $1.7m in revenue delivered in FY19, of which 80% is recurring, and $300,000 EBITDA. 

“Despite challenges within the global economy, Novatti is steadfast in its plan to create long-term value for its shareholders by delivering on its growth-focused strategy,” said Novatti CEO, Peter Cook.  

“The acquisition of Emersion does this by strengthening Novatti’s existing capabilities to digitise payment and subscriber management services, while also expanding its recurring revenue and loyal customer base.” 

Having last year obtained Visa Principal Issuer Status, Novatti has been issuing prepaid VISA cards for the past six months which can be used in lieu of cash. As has been reported in Australia, many businesses are no longer accepting cash payments due to the possibility of COVID-19 spreading via contact. 

Whilst Novatti’s payment processing business has already partnered with WeChat Pay and AliPay – two of China’s largest online platforms – the Emersion acquisition further brings partnerships with major international software platforms Xero, Salesforce and ConnectWise. 

“Emersion helps businesses Engage with their customers, Integrate Systems and Automate business processes including Signup, Ordering / Provisioning, Billing, Rating Usage all with Embedded Payment. This saves most small businesses at least 40 hours of work every month, making the implementation of Emersion Systems a very compelling return on investment,” said Emersion Founder and CEO, Paul Dundas. 

For the Quarter ending 31 March 2020, Emersion reports more than $500,000 in revenue, of which 80% is recurring with the service being an essential business service as more transactions are processed online through coronavirus lockdowns. 

As consideration for the acquisition, Novatti will pay $1 million in cash over the next 15 months as well as issue $1.6m in NOV shares which will be escrowed for 12 months. 

The acquisition follows a strong six months for Novatti in which the Company was granted VISA Principal Issuer status, delivered record revenues for the December quarter and secured full funding for their digital banking service which is expected to launch in the coming months.

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