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Spenda draws down another $2m from debt warehouse for bump in recurring revenue

To thrive in today’s competitive business landscape, on-demand financing can create make-or-break opportunities for small businesses that need a quick capital injection to seize on opportunities. It’s a need being met by transaction service company Spenda (ASX: SPX) which is seeing an uplift in its B2B lending and financing products.

Spenda initially secured a debt warehouse facility of up to $50m in August 2022 with an unnamed lender, and has drawn down a further $2 million from the facility since 31 March 2023. It takes the total drawdown to $13m – funds they have on-lent through their on-demand lending business.

Seeking to grow its lending business by broadening its target industries, Spenda acquired new customers from the food and beverage industries, transport and logistics (gig economy), as well as labour hire. At this stage, Spenda is unable to determine the precise amount of revenue to be generated through the boarding of these new customers as revenue generated will depend on the draw down on funds from each facility.

However, the revenue generated is expected to be material to the Company with the $2m growth in lending activities is expected to generate Annual Recurring Revenue (ARR) of approximately $462k assuming funds drawn are fully utilised at Spenda’s yield of 21%.

Payment volumes, which represent payments processed via the Spenda Platform, were $22.5m for the three months ended 31 March 2023. For the two months of April and May 2023, $27.2m in payments have been processed, which includes new business and the rollout of flooring solutions company Carpet Court and their franchise network, now transacting over the Company’s payment rails.

Commenting on the growth in Spenda payments and lending flows, Managing Director Adrian Floate, said: “The increase in lending and payment volumes is exactly what we would expect to see as our increased onboardings begin to show in our key leading indicators. Proving on-demand lending through the Spenda platform is a very compelling offer for our customers.”

Floate also stated that the Company’s tech ability to consolidate software that improves business efficiency is what sets Spenda apart from competitors and is starting to generate more interest in borrowing via Spenda.

Spenda supplies its customers a recipe of integrated software that enables the transfer of data from multiple software systems in one standardised technology solution, such as SpendaRetail.

For the quarter ending in 31 March 2023, Spenda recorded customer cash receipts of $817k, which represents 30% growth compared to Q3 FY22 and 4% growth from the prior quarter. The Company had a net cash position of $5.4m, and $4m unused financing facilities available at quarter end before raising $3.9m via a private Placement in June 2023 for general working capital.

Clara Venisha

Clara is a Business Reporter for The Sentiment.

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