Toronto, Ontario--(Newsfile Corp. - May 31, 2024) - Hank Payments Corp. (TSXV: HANK) ("Hank" or the "Company"), an emerging North American leader in the Banking-as-a-Service (BaaS) market with a platform that modernizes budgets and payments for enterprises and consumers is pleased to provide its third quarter financial results for the period ending March 31, 2024. All figures are in CAD.
FINANCIAL HIGHLIGHTS FOR FISCAL Q3, 2024
- Revenue for the quarter of $1.9 mm, an increase of 31% over the March 2023 quarter;
- Revenue for the nine-month period ending March 31, 2024, grew 20% year over year to $5.4 mm;
- Gross margins remain strong at 91%;
- Short term expansion of adjusted loss from operations to accommodate new product and business development. This is expected to materially reduce in the following quarters as the Company benefits from growth in Auto and related margin, and lower operating costs.
Consistent with previous quarter, Hank continued to experience strong revenues for the quarter ending March 31, 2024. The recent growth in revenue is primarily due to the Company beginning to recognize revenue from its Canadian licensing agreement starting in the first quarter of fiscal 2024. The licensing agreement has an initial term of three years with opportunity to both increase the revenue over time as well as renew and lengthen the term of the agreement. This agreement is expected to deliver minimum revenues of approximately $500,000 per quarter through first quarter of fiscal 2028.
Overall operating expenses increased by 7% this quarter in comparison to the previous quarter and increased by 26% in comparison to the same quarter the previous year primarily due to the investment in sales and marketing related to the Hank EDU platform and preparation and design work for the Equity Builder Product. With additional schools joining the Hank EDU platform, increasing revenues are expected to offset the increase in costs in the coming quarters and with the recently announced Hank Equity Builder partnership, the Company expects to earn back its investment in product development as those two channels scale.
The Company continues to prudently monitor expenses while supporting its revenue growth in the auto and EDU channels and now the Equity Builder Product.
YEAR TO DATE BUSINESS HIGHLIGHTS AND UPDATES
- In early March, the Company entered into a strategic partnership with a NASDAQ listed fintech bank to offer enhanced consumer lending and savings program and payments services (link to press release: https://www.nasdaq.com/press-release/hank-payments-and-finwise-bank-enter-into-strategic-partnership-to-offer-enhanced );
- Migration progress with FinWise Bank continues and expected to be completed in the third quarter which will help diversify Hank's deposit composition and over time reduce the cost of funds through relationship banking and add new revenue line items;
- Auto channel customer growth of 32% year over year as of May 1st and 26 new auto dealers have signed up with Hank so far in 2024;
- Over 238 active auto dealers in the US are now using the Hank platform to make warranty and insurance products more affordable, and to improve the build-up of vehicle equity for their customers;
- Total auto loan balance reductions, facilitated by Hank Auto on behalf of consumers are up 11.5% year over year to over $77,000,000;
- College agreements in the states of Texas, Oklahoma and South Carolina for the Hank EDU payments platform are now processing on a monthly basis;
- Hank EDU has disbursed over $900,000 USD to over 1100 college students since launching its EDU payment platform for the education market in late 2023;
- Several colleges are completing their integration phase and launching in the coming months; and
- In May, the Company signed a strategic 5 year licensing agreement for the Hank Equity Builder product with HELO. HELO has the conditional exclusive right to resell Equity Builder and the Helo customizations in the US during the term provided that they deliver a minimum annual net subscriber growth of at least 30,000 new paying users annually (link to press release: https://www.newsfilecorp.com/release/211110).
Michael Hilmer, CEO and Chairperson, commented, "We continued to diversify our revenue streams with innovative products that are quickly adopted in their target markets with new deals while our Auto business thrives." He added, "The Company is prioritizing positive cash flow and EBITDA from operations and is focused on growth of high margin revenue while managing a relatively low operating cost model, relative to the growth opportunities available. We are nearing the period where our margin expansion drives full coverage of operating costs and all new business, as and when launched, will become accretive to the bottom line leading to near-term positive operating income as planned."
A comprehensive discussion of Hank's financial position and results of operations is provided in the financial statements and MD&A for the nine-month period ending March 31, 2024, filed on SEDAR.
About Hank Payments Corp.
Hank Payments Corp (the Company or "Hank") is a North American leader in consumer Fintech Software-as-a-Service (SaaS) and Banking-as-a-Service (BaaS) platforms that manages consumer cash flow and budgets on an automated basis using proprietary algorithms that collect, store and disburse cash as required to discharge obligations in a timely fashion. The Hank stack provides for several vertical market applications of the technology, with features specific to channels and enterprise accounts ("Partners") that allow those partners to operate new lines of business and revenue streams, using Hank. The Partners benefit from new revenue streams and powerful insights that open up additional opportunities for Partners to grow assets using Hank. The Company operates exclusively across the USA, with certain leadership and technology functions in Toronto. Hank houses the complex technology, banking, treasury, customer service, sales and operations teams that acquire and service consumers. Hank currently charges upfront enrolment/setup fees and recurring monthly fees based on the types and quantity of payments that Hank Payments administers for the consumer (the "Users"). The Company acquires Users through various channels including (i) small to medium sized enterprises (the "SME Partners") and (ii) large enterprise businesses (the "Enterprise Partners"). The Company's BaaS model is emerging which is expected to add additional fees including software licensing and usage fees. For more information visit our website at www.hankpayments.com.
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. A number of 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 as a result 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 416-580-0721. For Investor Relations please contact ir@hankpayments.com and visit the Company's website at https://ir.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.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/211207
SOURCE: Hank Payments Corp.
