ASX-listed fintech Beforepay has announced its first-ever quarterly net profit before tax of $1.64 million, with a big jump also reported in the company’s EBITDA.
The turnaround in NPBT in the first quarter of the 2024 financial year (Q1 FY24) reverses losses of $0.46 million and $2.63 million reported in Q4 2023 and Q1 2023, respectively.
The $2.61 million EBITDA also represents a nearly five-fold improvement on the $0.54 million delivered in the previous quarter. Beforepay said this was “driven by the increase in net transaction margin [NTM] due to lower net defaults in the quarter”.
The NTM, which was up by 38 per cent quarter-on-quarter to $5.63 million, is calculated by taking its fee income from sales and subtracting bad debt and receivables warehouse funding costs.
Beforepay, which defines itself as a ‘pay on demand’ fintech, also recorded a 27 per cent jump in pay advances on its platform over the last year, hitting $177.3 million. This is up nine per cent on the previous quarter.
Encouragingly, net defaults also declined to 0.9 per cent, an improvement from 1.6 per cent in Q1 FY23.
This decline, according to the company, was driven by improvements to its risk model and limit management, continued strong recoveries, seasonal effects, and a writeback of Q4 FY23 expected loss provisions in Q1 FY24.
A successful cost-cutting drive has also seen operating expenses down 29 per cent year-on-year, and 10 per cent quarter-on-quarter to $3.95 million.
Beforepay chief executive Jamie Twiss said he was “proud” of the company’s first quarterly profit.
“This result shows that Beforepay has successfully executed its strategy, delivering strong top-line growth and good unit economics while tightly controlling costs, and demonstrates the resilience and sustainability of our business.”
While we expect that future quarterly results may be up or down, given the seasonality in our business, we are confident that Beforepay is well positioned for the future.”
While active user growth remained largely static between the last two quarters (increasing by around 800 users), year-on-year the firm reported a 27 per cent jump in active users, hitting a total of 234,848 users.
Beforepay blamed the flatlining userbase growth on “seasonality as well as continued low marketing spend”.
The fintech, founded in 2019 and specialising in salary pre-payments, said it will “continue to be focused on growing its core business efficiently, acquiring additional wage-advance customers in Australia through a mixture of organic growth and paid marketing, with a marginal acquisition cost below customer value”.
Priority will remain on growth without adding significant cost to the current operating expense base, the company said.
Beforepay said it is also looking to partner with other organisations to leverage its platform and risk-management tools and for offerings in new jurisdictions.
