Cirralto has transformational quarter as it moves into new target segments and embarks on key strategies to meet growth opportunities

Cirralto Ltd (ASX:CRO) has had a transformational quarter as it recorded its sixth consecutive quarter of double-digit growth in the June quarter as it moved into new target segments and new business initiatives.  During the quarter, it continued to successfully onboard new customers across multiple market segments, with primary focus on customer segments that can deliver long-term sustainable growth and layered recurring revenue. Customer cash receipts continued to grow quarter-on-quarter, up 14% to $334,000, resulting in a closing cash position of $21.4 million end June 2021.  Cirralto also outlined its future plans to establish a debt capital base and continue to review and assess potential acquisition opportunities.  Strategic nodes and sales strategy The company remains focused on winning significant nodes and then selling into their connected customer base. The ‘flywheel effect’ of the Spenda platform and its invitation-based customer acquisition model is beginning to cut through and it has had a licensee growth of 9.62% in the June quarter. It has also successfully engaged with franchise businesses in the flooring and soft furnishings industry and will be supplying a variety of debt and payment services. The delivery of these transactions is a key building block in its node strategy and will act as a standardisation model for other transactions currently being contemplated in this area. As part of its move to develop core revenues in the agriculture sector, it entered into a strategic relationship with Fresh Supply Co as a referral partner. The companies are working on a strong pipeline of opportunities in payments and non-bank lending presenting material revenue-generating opportunities. They will also work collaboratively across their respective mutual relationships with Mastercard (NYSE:MA). Its tech channel is focused on the delivery of its Spenda Payment Services (SPS) technology to other software and marketplace companies, with commercial partnerships with technology companies an increasing focus as it scales the SPS core offering. Cirralto also expanded its footprint into the fashion sector with the engagement of an Australian online clothing marketplace that connects wholesalers with retail outlets. It is also working with early adopters and partners to roll out its solution combining both software and payment services in the automotive sector. It is leveraging long-term relationships in this segment to establish a baseline customer base of up to 100 locations through the remainder of 2021. In line with its expanding target segments and new business initiatives, Cirallto has restructured its sales activities and made key recruitments within its Sydney team to provide valuable resources as it scales out the core business. “Significant opportunities” ahead Cirralto managing director Adrian Floate said: “This has been a transformational quarter for the company. “We are commercialising several products in five major verticals that are enabling us to attack the addressable market of late payments that in Australia alone is worth more than A$110 billion. “We have established critical building blocks during the June quarter that will allow us to grow sustainably. “We were really pleased to achieve our six consecutive quarter of double-digit growth. “We are extremely well-positioned to capitalise on the  significant opportunities that lie ahead of us in FY22 and beyond.” Spenda payment suite commercial rollout Cirralto successfully upgraded its SPS, to include several new features that improve the utilisation of BPSP/BPA capabilities and enhanced support for bank account to bank account. This will support future scale in payment and cash flow services, allowing the company to pursue distribution chains and national providers, while also increasing the speed and scale that a customer can onboard. It has also released a version of the core SpendaPOS system, which targets the automotive industry. S&P Down Jones Index inclusion With effect from 21 June 2021, Cirralto was added to the S&P Dow Jones Index’s All Technology Index, which features Australia’s leading and emerging technology companies. This is a significant achievement and one that recognises the company’s growth, software capabilities and upward momentum. Invigo acquisition The acquisition of Invigo is expected to unlock multiple commercial opportunities, drive revenue growth and provide opportunities for Cirralto to deploy its Spenda products across Invigo’s customer base. Debt warehouse for on-lending The company needs to establish a debt base for on-lending purposes following the acquisition of Invigo and the blending of its customer bases, coupled with recent customer and referral agreements. It is currently executing plans to establish a debt warehouse to support demand for its payment and non-bank lending services across the AgriBusiness, Tech and SpendaCollect channels. The establishment of a debt warehouse will be a major enabler for future revenue as the company unpacks its Spenda technologies in the market. Appstablishment acquisition The company completed the acquisition of its long-term licensing collaboration partner, Appstablishment Software Group Pty Ltd – an essential step in the company’s plans to align its technology assets and provide a platform for institutional support. The acquisition removes licensing fees and duplicated overheads, enabling Cirralto to offer its Software as a Service (SaaS) and payment services at a very competitive market rate, reducing pricing inflexibility as a barrier for growth. It also offers considerable technology uplift, with the addition of a ready-made, robust development team that works cohesively with existing business resources, and control of both the product roadmap and the development tempo. Looking ahead As it rolls out payments and non-banking lending services and digests its recent acquisitions, Cirralto is looking forward to executing key strategies to meet its growth opportunities. These include: Establishing debt capital facilities for non-lending purposes; Further execution of the node & spoke strategy in tech, automotive, franchise and agriculture; Identity driven customer boarding; Expansion of customer service and credit teams to support demand; Consolidation of credit processes for payments and nonbank lending Assessing further potential acquisitions of assets, IP and customers’ bases to further leverage Cirralto’s core business; and Completion of works to enable the deliver of commercial agreements under recently signed deals with Mastercard and Fresh Supply Co.