Sub holder reducing their holdings

If I'm not mistaken, Anacacia looks like a private equity firm - https://www.anacacia.com.au/

Have sold a while back after going through the last update.Given growth has flattened and sellers still active, maybe revisit at $1.20 or when the macro becomes clearer

Downgrade from Bell Potter but still price target $1.97:

Smartpay Keeps Buy Rating Despite Moderating Revenue Outlook -- Market Talk

  0114 GMT - Slowing consumer spending and moderating inflation prompt Bell Potter to lower its transaction revenue forecasts for Australia-listed payments company Smartpay. Analyst Hayden Nicholson lowers the forecasts by 4.5% for fiscal 2024, by 9.1% for fiscal 2025 and by 15% for fiscal 2026, reflecting the assumption that average revenue per payment unit will slow. Yet he tells client in a note that he sees an improved earnings outlook from fiscal 2025 amid lower variable costs, lower software capital expenditure and industry regulation on mobile-wallet transactions. Bell Potter trims the stock's target price 6.2% to A$1.97 and maintains a buy rating. Shares are flat at A$1.525. (stuart.condie@wsj.com)

(END) Dow Jones Newswires

August 08, 2023 21:15 ET (01:15 GMT)

[held]

Some selling by Wilsons asset management which is unusual given the recent solid results

I admit I came into Smartpay (around 95c) early this year with a bit of apprehension as I'm more mining/biotech but was attracted by the financial metrics, product scaling, customer satisfaction and also see it being used in a few places.

One broker on Capital IQ (I believe it is Bell potter) also forecasts EPS of 0.03 for FY24 which implies a PE of around 56 at current price. Overvalued but looks like you are paying for quality.

So the selling could explain the weakness today (14 July). Maybe Wilsons is selling some to chase other opportunities or they see the Bell potter report as well.

[held]

It's difficult to say anything bad about the results. Smartpay is on a big purple patch at the moment.

Free cashflow lags some of the other numbers, because the growth requires upfront capex in payment terminals. The company increased the Australian fleet terminal by +62% this financial year. Australia is now 81% of the group's revenue having been 40% only 3 years ago.

Coming out of March 2023, the revenue run rate is already +17% on that of FY23, due to the extra terminals deployed during the year.

There is also a potential kicker on whether SMP can transition its New Zealand business (19% of group revenues, but 2x the number of terminals vs Australia) from a terminal rental to payments acquiring business and become vastly more profitable. Something to watch out for.

Roughly 4.5x revenue, 50% gross margin, 33.6x EBIT and FCF positive despite the capex required to fund the company's impressive growth rate.

Not sure what others make of this tweet. I know TLX put out only revenue numbers in the JP Morgan conference before the formal business update came through.

Also a bit unusual for me being a holder of Smartpay given they operate in a highly competitive industry. But do like the fact there are lots of positive testimonials about their service and they seem to be growing.

Given the macro picture is against retail at the moment, I didn't think Smartpay share price would hold up this well.

[held]

Saw Smartpay terminal being used at the local Shanghai Chinese Restaurant at Chatswood.

Obviously when I saw it, I knew immediately I will be given a surcharge.

So I opted to pay for cash instead. Once a cash person, always a cash person.

I'm sure it will be useful some day when I have no cash in my wallet. But smartpay appears to be getting more visible.

[held]

Surprised that there’s not a lot of chatter on this name, given the share price is hitting into all time high territory.

1H FY23 results (30 Aug half end) was out on Monday and the company has continued its path of revenue growth, profitability and positive free cashflow.

Group revenue grew half-on-half by 23% (68% vs pcp), with EBIT and FCF still both positive at $3.8m and $3.0m respectively (not too dissimilar to the last half).

While increased advertising spend was largely foreshadowed, it was a significant jump in salaries that muted profit margins in the half. The CEO clarified this during this morning’s Coffee Microcaps interview - it was due to the hiring of a Business Development manager and Outbound Sales manager in late Q4 and the building out of the teams underneath which spiked the costs. Salary expenses will return to the previous run rate in 2H FY23.

In my previous post, I wrote about Smartpay’s “marketing innovation”, and still think this is an area that is being dismissed by some. There’s a value proposition difference between a “completely free payment terminal” and “here’s a bunch of fees to use our terminal, but you can recoup it by configuring a surcharge”. The end result might be the same, but the cognitive and initial financial load on a small business owner is tangibly lower.

The big 4 banks (76% share of the merchant terminal market, excluding Square - according to Tyro) will have difficulties responding.

1. The merchant terminal business is trivial compared to everything else a bank does. It’s really just an add-on to help support the business banking proposition.
2. Banks have much bigger and much more profitable credit card divisions. The employees working in credit cards have had many years of education from their scheme partners (Visa, Mastercard, Amex) that credit card surcharges are bad because they suppress spending. Suppressing spending is bad, because the bank makes money from transactions (interchange) and larger outstanding balances. Who’s going to be ballsy enough to introduce a SmartCharge feature at a bank to make next to no money at any risk (perceived or otherwise) of endangering the top-line of a much larger and more profitable line of business?

Jack Mallers has just announced a partnership with NCR, one of the largest POS providers to integrate lightning payments.

This eliminates merchant fees, potentially rendering Smartpay's business obsolete. I don't know when this innovation will be open up to Australia, but shareholders need to keep a close watch on this development.

Smartpay released a trading update yesterday, which showed their continued strong growth trend. The quarterly group revenue of $13.2m was up 43% YoY and 32% QoQ and was wholly due to the Australian business, although the mature NZ business held steady.

The general sense from the release was the easy gains from rollout of previously sold but unutilised terminals may have a little way to play out but is probably closer to the end than the beginning. However, the sale and rollout of new units reverting to a 'normal' run rate just means they go from hyper growth to merely mega growth.

What is really pleasing is ARPU on an annualised basis exceeded over NZ$4k for the first time and I think this still has someway to play out over the next 12 months as current COVID fears subside. Further COVID-variant risks continue but when you consider this business - that you might think was most at risk to a pandemic lockdown scenario - is at or very near financial sustainability and has built that in the midst of a pandemic, it makes you wonder what they can do in a more normalised environment.

[Held here and IRL]

Smartpay is likely to benefit from the re-opening of retail in Australia, and should have strong results for Q2 2022. The same thing occurred overseas, with peers Square Inc and Lightspeed reporting strong GPV growth in the June quarter of 2021 as their economies re-opened. However, both companies have hit headwinds in the September quarter, as GPV growth normalises, and headwinds begin to return, noting the following challenges the industry faces:

• Withdrawal of fiscal stimulus from governments, creating a drag on the economic recovery.
• Inflation in commoditises, such a oil, reduces discretionary spending.
• Boomer generation retirement generating a headwind as boomers spending reduces.
• Emergence of DeFi, although not material presently, will disrupt this sector, as it presently is doing to remittances.

Smartpay may return to pre-pandemic growth rates, but I think that is the most optimistic outcome one should be modelling.

Smartpay looking interesting here and starting to improve over the last couple of weeks from a share price point of view. I think market is starting to price in the reopening of NSW and also SMP is a good inflation play as they clip the ticket on transactions, so increasing prices benefits their business. Still cheap in my opinion for a business with exceptional growth. Hopefully management start to engage with the market a bit more to get their story out there. 

@jwrostangno27

Sorry if I didn't phrase it correctly.  Smartpay is supporting Alipay and WeChat pay as part of its mobile payment options on its platform.   It's not competing.  It's 'joining forces' with some of the biggest mobile payment operators in the world.   It is only going to be a good thing for Smartpay

https://www.smartpay.com.au/eftpos-features/alipay-wechat-mobile-payments/

I have not heard anyone mention Alipay and WeChat pay as a point of difference.

To me, these are epayment giants just dipping their toes in the Aust environ.  The fact the Smartpay have already integrated gives me confidence that they are in the know.

Pre-COVID, Alipay and WeChat pay was beginning to gain traction.  Take a walk around Chinatown and every second retailer had a terminal on their counter.  Granted, COVID has sent a fair few Chinese students back home so there might not be as many users at present, but when the borders reopen, who's to say they won't return, with their families in tow?

WeChat pay in particular do a lot of viral marketing on their platform creating their own markets and sales funnels.  Social media + payments all-in-one.

Further to the monthly meeting and Smartpay mentioned as one to look at, I suggest seperating the NZ business from the Australian business. 

The Aussie business is the one with all the growth and this is where the opportunity is. The NZ business is likely to recieve a takeover again in the future and has been a cash cow to grow the Aussie business in the past. 

Their product allows businesses to pass on eft fees to their customers, which is very unique in the Aussie market and the reason for their growth. So a small business turning over $1m per annum could save between $10-15K per annum in eft fees. Thats money straight to their bottom line. 

One of the best fund managers around who are really good at picking companies with investing tailwinds are Pie Funds. In this video market update they are looking to invest in companies who would benifit from things like inflation. This is because they are getting feedback from management that there are cost pressures across the board with transport, raw material and labour costs increasing. So businesses like Tyro and Smartpay where they clip the ticket on the total transaction should benefit. I own Smartpay but not Tyro. Definetely worth watching. Pie were very early to pick up on the meal kit demand as well as the demand for bikes and pets over the covid crisis and their funds have performed exceptionally well. 

https://www.piefunds.co.nz/Market-Insights/Archive/market-update-july-2021?utm_medium=email&utm_campaign=Market%20Update%2022%20July%202021&utm_content=Market%20Update%2022%20July%202021+CID_dcee56077e666f75f2ed9cfb35c6f34e&utm_source=Email%20marketing%20software

SmartPay with a good update this morning showing 158% growth in their aussie business. Taking into account all the closures in Vic and regional NSW in June this is an incredible result. It continues to look incredibly cheap for a growth company and I feel the maket should catch onto it in then next few months. Much cheaper than the likes of Tyro, completley under the radar in my opinion. See attachment. 

Smartpay/Tyro. 

Has anyone used or had a quote from Tyro? I am just wondering if they offer the free efpos machine for higher turnover businesses? They don't advertises doing so. 

A quick look at Smartpay site. They add an automatic surcharge to the customers bill to cover card fees. On their example they have a 1.65% charge on a $29 meal. That's high. If that's a fixed fee of 0.48c as suggested on their site, my $5 coffee becomes $5.48. It's like being quoted a before gst price. Feels like a rip off I'm going next door for my favourite tipple from now on.

A meal for 2 at $70. 0.48c isn't going to be noticed by me (and I'm tight !!!) especially if the food was good. This is still 0.68% card fee. What do banks charge?

Small transactions but high customer turnover then smartpay is good for the business but maybe only short term or where local custom is not a priority!? Low customer turnover but high invoice charge, smartpay is very cheap. I doubt they will be interested in these businesses though. 

Tyro is looking to reduce those fees for the business. They have lots of cash. Experience directors and bank facilities. I would think Tyro have the ability to offer free machines if needed!?

Just had a beautiful walk on the caloundra boardwalk. Stopped for a coffee and paid using their Square efpos app. On the website they also charge 1.6% transaction fee. Bought other stuff so not sure if they passed on the fee. Competition is high!?

08-May-2020:  CCZ Equities Research: Smartpay (SMP): A Smart Buy, Deal or No Deal

See also:  01-May-2020:  Update On Proposed Sale of NZ Business and Assets

CCZ has a "Buy" call on SMP and a TP of 56 cps (previously 62 cps).

SMP closed up +10% at 44 cps today (08-May-2020), possibly partly due to CCZ distributing their "Buy" note this morning.