The Good:

• Record quarterly revenue of $12.5m and annual revenue of $46.5m shows that revenue has continued to grow even through the current change in direction of the business.

• Operating costs of staff and admin continue to drop with further operational cuts expected over the next quarter. However as @Strawman regularly reminds us, you can’t cut your way to greatness and shows there has previously been excessive unfocussed spending in the past.

• Main business focus is now on AU/NZ payments, which makes up 30% of revenue , which is up from ~25% in FY23.

• AUDD increasing usage with ~$100m in payments processed since March 24. As the value of AUDD increases, NOV will make more from the interest in holding the corresponding $AUD. (Still insignificant at this stage). This has led an AUDD valuation of $5.1m in July. Currently Novatti holds $4m of the shares in the company.

The Not So Good:

• Still burning significant amounts of cash each quarter with $2.53m of operating outflows 
• Sale of IBoA for $2.87m. This has been a very costly exercise with significant funds invested into this venture.
• Strategic review is ongoing and likely other businesses on the chopping block. Emersion and ATX are prime candidates.

Watch Status:  

Slight improvement due to reduction in outgoings and improvement of revenue.

Valuation:

To be updated after Full Year results.

What To Watch:

• New cashflow positive date of H1FY25. Last chance here.
• Number of additional businesses added after Q1FY25. This will be an indicator of NOVs ability to meet their targets. An additional 500 merchants is a significant increase on the 125 added over FY24.

• Q1FY25 to have a further $3m of annualised costs reduced ~ $750k for the quarter and the removal of IBoA expenses which is also ~$700k per quarter. Therefore would expect cash burn to be less than $1m if H1FY25 cashflow target to be met. 

• $8.4m cash at the end of FY24 means no further capital raises should be required, with a further $2.87m coming in from the sale of IBoA. At the current market cap there is little appetite for investors to contribute further capital.