Post by
Wallstreetjack on Nov 16, 2017 1:41pm
Virtus Advisory Group Q3 Commentary
Commentary: VersaPay Releases Q3’17 Results in line with Analyst Estimates – Revenue up 98%
Yesterday afternoon, VersaPay (TSXV:VPY) released their Q3’17 financial results. We are very pleased to see that the company continues to grow revenue from their ARC solution while working towards building out their channel distribution network. Let’s take a look at some highlights from the results:
· Q3’17 revenues of $0.78 million compared to Q2’16 revenue of $0.40 million, an increase of 98% YoY. Revenue for the nine months ended September 30, 2017 totalled $1.90 million as compared to $1.04 million the year prior, an increase of 82%.
· Gross margin amounted to 73.3% in Q3’17 compared to 55.2% in Q3’16, attributable to ARC accounting for larger portion of the revenue. Gross margin for the nine months ended as of September 30, 2017 was 68.6% as compared to 54.2% the year prior.
· As of November 15th, 2017 over $3.4 billion of invoices have been processed through VersaPay, representing approximately 2.5 million invoices.
· 92,500 end customers representing growth of 80% since June 30, 2017. The number of end customers who were active on ARC at the end of Q3 was 57,000. So the company is starting to see accelerated growth in adoption over the past month. (One thing to keep in mind is that one of their largest clients, Livingston International that recently signed with VersaPay has not even gone live yet.
We believe the most telling statistic is that the number of invoices processed in the first half of Q4 is 231,800 as compared to 290,600 in all of Q3.
If you recall our note after this year’s StableView TECH17 event, we discussed how VersaPay presented alongside RBC to discuss why the Canadian bank had elected to work with VPY. The company expressed that both sides are very optimistic about the potential the partnership brings to each company and that we could expect RBC to be fully integrating ARC into their enterprise customer offering later this year. Accordingly, we believe that 2018 is the year we will see much more explosive growth for VersaPay.
Despite that, we are very pleased to see that the company effectively doubled their quarterly revenue and was in line with Haywood’s estimate of $0.8 million in revenue for Q3’17. In addition, Haywood has raised their price target to $2.75 as they too appear to be bullish on VersaPay’s strong growth prospects.
What else can we expect from VersaPay in the coming quarters? For starters, expect RBC and Livingston start to ramp up on adoption of ARC and closing on an already strong pipeline of clients they are going after. VersaPay continues to have a very serious discussions with a number of US financial institutions and a number of multinational organizations. While we do not expect this to happen overnight, this prospect remains very strong and we are optimistic that CEO Craig O’Neill will manage to bring another bank on board and more.
As well, the company has already made two key hires to actively engage the U.S. market– something that has been explicitly made clear to be a focus of 2018. VersaPay has a number of potential opportunities in the U.S.: a partnership with a U.S. financial institution, partnering with new channel partners that focus on a U.S. client base and continued direct sales in that market. With the strategy still in the early stages but moving quickly, VersaPay is poised to quickly attract new revenue out of this market in the coming quarters. All in all, we are very bullish on VersaPay moving forward and expect the company to continue growing at stellar rates and rewarding shareholders for their patience.
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