Toronto, Ontario--(Newsfile Corp. - May 30, 2022) - Hank Payments Corp. (TSXV: HANK) ("Hank" or the "Company"), a North American leader in consumer FinTech Software-as-a-Service (SaaS) announced today record quarter-over-quarter organic revenue growth, record gross margins, continued strong ARR and LUM (defined below) and, in addition to the B2C application of personal financial wellness through automating payments management resulting in improved household cash flow and debt management and overall financial hygiene, acceleration of its B2B go-to-market strategy to become the industry-leading Enterprise SaaS payments platform.
Headquartered in Canada with operations in the United States, Hank is on a mission to transform outmoded personal financial wellness and consumer financial technology through offering a best-in-class payments platform and payment management capabilities. Hank's modern, elegant and proprietary cloud-based solution is revolutionizing the way both consumers and lenders alike manage payments with speed, automation, ease-of-use and best-in-class service as well as B2B SaaS Enterprise solutions that allow Hank to power bank, lender, originator, debt settlement companies and gig-worker platforms.
FINANCIAL HIGHLIGHTS - CONTINUED STRONG FINANCIAL FUNDAMENTALS
- Revenue for the third quarter ended March 31, 2022, grew 24% year over year to $1,378,598. (Nine month $3,863,691, 21%)
- Gross margins grew to an unprecedented 89.2% in keeping with our historical trajectory.
- Revenue quarter over quarter grew 6% as the Company benefits from the recovery in the auto industry.
- Annual Recurring Revenue (ARR) and Liabilities under Management (LUM) continue to remain strong.
OPERATING AND STRATEGIC MATTERS - EVOLUTION TO THE ENTERPRISE AND FEALTY TO SHAREHOLDER VALUE
The Company's historical B2C sales channel, being the SME auto dealer channel, continues to perform well and has resulted in predictable consumer growth, consumer loan payment performance and related analytics, generating for the Company stable and predictable revenue growth and providing the resources and expertise necessary to win larger contracts in that channel and allowing the Company to focus on the additional goal of advancing its B2B SaaS Enterprise customer opportunities.
The Company is pleased with the exceptional level of interest and demand it has received in the Enterprise SaaS space. As a result, the Company is, as a natural progression in its evolution, pivoting its head count, other resource and expense base focus from B2C retail customer digital sales strategies in favor of negotiating potentially significant revenue generating (and expense efficient) B2B Enterprise SaaS licensing contracts that allow Hank to power bank, lender, originator, debt settlement companies and gig-worker platforms.
On the expense side of the ledger, operating expenses in the quarter grew in part due to investments in digital marketing and related overhead, public company expenses, technology platform advancements to support Enterprise SaaS proposals as well as costs associated with evaluating potential strategic transactions.
The Company has in a prudent manner addressed this by identifying and acting on several cost reduction measures post-quarter end, namely the elimination of various roles not directly contributing to the B2B Enterprise SaaS strategy, which will result in significant ongoing cost savings as Hank now focusses on the execution of highly accretive SaaS Enterprise licensing deals and strategic partnerships that will when finalized enable the penetration of mass markets, with markedly lower customer acquisition costs and lower relative customer service costs as scale is achieved.
On the M&A front, the Company has conducted a top-to-bottom analysis of its in-process acquisitions funnel with a laser focus on the amount of accretion of Hank shareholder value resulting from said acquisitions in relation to the amount of dilution that Hank shareholders will incur from said acquisitions and has determined that it will not be proceeding with the two transactions identified, including the previously announced mortgage servicing transaction. On balance, the organic growth the Company is currently enjoying and anticipated to enjoy from its current opportunities funnel will bring more users to the Hank platform than proceeding with the two proposed acquisitions, without the Company incurring the execution and integration risks and costs associated with said acquisitions. The Company is open to evaluating accretive transactions, however, strategically the Company has determined that expenditure of its resources is best suited to support the near-term demand from Enterprise SaaS accounts.
GENERAL CORPORATE MATTERS
The Company has granted a total of 150,000 stock options of Hank under its Stock Option Plan, with an exercise price of $0.15 and an expiry date of May 30, 2024. The options are subject to the standard provisions of the Hank's Stock Option Plan. Jeff Guthrie President & COO will be leaving the Company for personal reasons to attend to a family member illness effective May 31, 2022. The Company and its Board of Directors wishes him and his family member best wishes during this challenging personal period. A comprehensive discussion of Hank's financial position and results of operations is provided in the financial statements and MD&A for the three and nine-month periods ending March 31, 2022, filed on SEDAR.
Commenting on the quarter and year to date results, Michael Hilmer, Chairperson and CEO comments: "I am very pleased with the work the team has done to grow the SME channels business while evaluating transactions and related planning for our Enterprise SaaS funnel. I personally want to thank Jeff for his dedication to Hank and offer my heartfelt good wishes for a speedy resolution of his family health situation. I would also like to thank our other existing and departing team members for their exceptional hard work as we qualified opportunities and set Hank on a strong and disciplined expense and growth path. I am most excited about the magnitude and economics of the Enterprise SaaS funnel which continued to build in many strategic verticals, as well as key partnerships we look forward to announcing through summer in conjunction with lower operating costs and expected increases in gross dollar margin."
About Hank Payments Corp.
Hank is a SaaS based consumer Fintech company. The industry leading Hank cloud-based software platform (the "Hank Platform") acts as a consumer's financial budget manager using powerful technology to automate a consumer's personal cash flow and payments. Through its FDIC (Federal Deposit Insurance Corporation) insured bank partners in the U.S., Hank helps consumers in all 50 States find funds in their existing cash flow and speed up the retirement of liabilities. The Hank Platform instructs its banking partners to debit consumers when they have cash, store the money in FDIC insured accounts, then automatically pay bills and loans as they come due; often sooner than required. Approximately half of Hank's customers are financially sound and use the Hank Platform for convenience, while the other half improve their payment performance through the Hank Platform. Hank's customers pay setup and ongoing monthly processing fees while remaining on the Hank Platform for an average of three years. Hank continues to innovate and anticipates launching more expansive state of the art features to its expected growing customer base to provide greater visibility into their cash flow, credit performance, and viability to borrow or refinance at lower rates, including introducing Hank customers to interested lenders.
Forward-Looking Statements
This news release may contain forward-looking statements (within the meaning of applicable securities laws) which reflect the Company's current expectations regarding future events. Forward-looking statements are identified by words such as "believe", "anticipate", "project", "expect", "intend", "plan", "will", "may", "estimate" and other similar expressions. These statements are based on the Company's expectations, estimates, forecasts, and projections and include, without limitation, statements regarding the future success of the Company's business. Financial performance figures in Canadian Dollars unless otherwise indicated by "U" representing United States Dollars.
The forward-looking statements in this news release are based on certain assumptions, including, without limitation, the Shares beginning trading on the TSXV. The forward-looking statements are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Several factors could cause actual results to differ materially from the results discussed in the forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, the Company assumes no obligation to publicly update or revise any forward-looking statement, whether because of new information, future events or otherwise.
FOR FURTHER INFORMATION PLEASE CONTACT:
For more information regarding Hank Payments Corp., please contact: Jason Ewart, EVP Capital Markets, at 1-833-HANKPAY. For Investor Relations please contact ir@hankpayments.com and visit the Company's website at www.hankpayments.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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